Cost of clean fuel could push ferry fares up 14pc
Anita Lam
May 25, 2010

Fares on outlying island ferries could still rise by about 14 per cent despite a proposed government subsidy, if ferry operators are required to use cleaner fuel.
New World First Ferry and Hong Kong and Kowloon Ferry said the cost of ultra-low sulphur diesel was 20 per cent to 30 per cent higher than regular diesel, even if it was also 100 times cleaner.

Fuel consumption is also higher when using the cleaner diesel because it was less effective, forcing operators to use more of it. And engine parts on Hong Kong and Kowloon ferries using the diesel were found to wear out sooner than they should, pushing up maintenance costs.

The findings came as a nine-month trial of the diesel ended yesterday, although an Environmental Protection Department officer said it would be extended to allow for the collection of more information.

If the fuel proves to be a feasible option, it is possible the government will make it a requirement in future tenders for six outlying island ferry routes.

But Hong Kong and Kowloon Ferry's general manager Nelson Ng Siu-yuen said using the cleaner fuel could raise operating costs by 25 per cent. "If the government insists [on using the cleaner diesel] but does not subsidise the cost of it, eventually the burden will be shifted to the passengers."

For example, if fares rose 25 per cent, the passenger would pay the portion of the increase caused by the general inflation rate (say, 3 per cent) plus half the remainder of the increase (half of 22 per cent), with the government paying the other half - resulting in a fare rise for passengers of about 14 per cent.

The government last month proposed a plan to allow the two ferry operators to apply for up to HK$120 million in public funds over three years to offset maintenance costs.