Paper WMSC 03/10 For discussion Development of EcoPark

Purpose This paper seeks Members’ views regarding the proposed leasing arrangement for the EcoPark Phase 2 lots.

Background 2. EcoPark is one of the key initiatives in “A Policy Framework for the Management of Municipal Solid Waste (2005-2014)” which provides long-term land at affordable costs for the development of the recycling and environmental industry with a view to encouraging investment in more advanced technologies and value-added processes. 3. The 20 hectare EcoPark is being developed in two phases. Phase 1 occupies approximately 8 hectares of land and comprises a multi-function administration building with a visitor centre, and six lots with a total of 3.6 hectares of rentable area. Phase 2 occupies approximately 12 hectares with a total rentable area of about 10 hectares. A plan showing the layout of the EcoPark is at Enclosure 1. 4. All six lots in Phase 1 of the EcoPark have been leased out for the recycling of waste cooking oil, waste metals, waste wood, waste computers, waste car batteries and waste plastics. As at end September 2010, four tenants (waste cooking oil, waste metals, waste wood and waste computers) have commissioned their operation. As for the remaining two tenants, one plans to commence initial operation by October/November 2010 whereas the other will soon start the construction work. 5. The Administration is setting up two waste recycling centres in the EcoPark Phase 2 with a view to providing a secured outlet for recyclables with relatively limited market demand; they include waste plastic which is affected by economic downturns and waste electrical and electronic equipment (WEEE). The two recycling centres are managed by non-profit making organisations selected through open tender and with subsidies from the Environment and Conservation Fund. The plastic recycling centre has commenced its operation in March 2010 and WEEE centre will start its operation by end 2010.

The site formation and road works of the remaining Phase 2 area have been substantially completed and the lots will be available for leasing by end 2010. v. The six Phase 1 lots were let in batches from 2007 to 2009. This local waste restriction is a critical constraint for some potential tenants who intend to invest in large scale value-added recycling operations. was a predominant factor in the selection of successful tenders. business plan and implementation programme of the tenders to ensure that the successful tender is able and committed to commence operation quickly. . iv. Experience Gained from Phase 1 Development 7. All Phase 1 tenants can only process locally-recovered waste in the EcoPark. local waste alone may not be enough to provide a large enough feedstock to sustain value-added recycling operations which often adopt automatic mechanical processes. The standard 10 years tenancy period is too short for projects with a large capital investment and discourages banks in approving loan applications for the capital investment of fixed assets. There is a real need to assess the technical strength. In some cases. financial capability. iii. As a result. however.- 2 - 6. the following key issues would need to be addressed in the leasing arrangement for the Phase 2 lots: i. ii. which was the sole factor in the financial assessment. From the experience gained in the tendering of the Phase 1. the rental offer in a tender. The standard lot sizes (around 5 000 m2) are too small for some large-scale recycling operations and inflexible for different types of waste recycling operations which require different sizes of land. The approach of designating specific waste type for each individual lot is not flexible enough to meet the market requirements and demands. and The tender evaluation of all Phase 1 lots was made based on a marketing scheme with a technical-to-financial weighting of 40:60.

Hong Kong Productivity Council. In the light of the experience gained from Phase 1 development and the feedback from project stakeholders including the EcoPark Advisory Committee 1 and the survey from the trade conducted in September 2010. Flexible Lot Size – The lot size to be made flexible within a reasonable range. for tenderers to bid to suit their own requirements. A comprehensive business and work plan will be required in the technical submission to ensure the tenderers are financially and technically capable of developing a purpose-built value-added recycling v. Hong Kong Institution of Engineers.000 m2. iii. iv. Hong Kong Waste Management Association. 1 The EcoPark Advisory Committee is chaired by the Director of Environmental Protection with representatives from trade associations. including Hong Kong General Chamber of Commerce.000 m2 to 25. Processing of Imported Waste Materials – Apart from the processing of locally-recovered wastes. Length of Tenancy – The tenancy to be lengthened to 20+ years so that initial capital investment can be amortized over a reasonably longer period. and Tender Assessment – A higher technical-to-financial weighting in the marking scheme up to 60:40 is proposed. EcoPark tenants may be allowed to process additional waste materials imported from outside Hong Kong to fulfill the operation throughput of some higher-end and value-added recycling operations which often involve a certain degree of automation. ii.- 3 - Proposed Leasing Arrangement for Phase 2 Lots 8. the following adjustments are proposed to increase the attractiveness of the EcoPark Phase 2 to the trade: i. Invest Hong Kong and Hong Kong Science and Technology Park Corporation. Hong Kong Chinese General Chamber of Commerce. say from 5. Open Waste Types – Types of waste to be processed in the EcoPark to be market driven and open for the tenderers to propose from a list which will be formulated based on the latest market conditions and consultation with the trade. universities and professional bodies. An initial list is shown in Enclosure 2. . Examples of such materials include waste electrical and electronic equipment and waste batteries. Federation of Hong Kong Industries.

and meeting the required statutory Tentative Programme 9. We plan to invite tenders for the first batch of the Phase 2 lots with an area of about 5 hectares by end 2010 / early 2011. The tentative programme is summarized below: Tasks Invitation to tender for 1st batch of Phase 2 lots Allocation of 1st batch of Phase 2 lots Invitation to tender for remaining Phase 2 lots Allocation of remaining Phase 2 lots Date End 2010 / early 2011 April 2011 Mid 2011 subject to 1st batch tender result Late 2011 Advice Sought 10. Environmental Protection Department October 2010 . Members are invited to note the progress of the development of EcoPark and to comment on the proposed leasing arrangement for the EcoPark Phase 2.- 4 - operation quickly requirements.

- 5 - Enclosure 1 Tu en M un To L To un Tan wu K g Lu ng Mu n a Ro To d P1 wn Ce nt re P2 St James’ Settlement [WEEE] P3 Phase 1 Administration Building and Visitor Centre Telford [waste Plastics] P6 Phase 2 P4 Yan Oi Tong [Waste Plastics] P8 Shiu Wing [Waste Metal] P11 5-hectare Phase 2 lots P9 available for tendering by end 2010/early 2011 P10 Hung Wai [Waste Wood] Cosmos Star [Waste Car Battery] P12 Champway [Waste Cooking Oil] Li Tong [WEEE] P14 P13 Marine Frontage Urmston Channel Layout Plan of EcoPark .

Concrete (i. Waste cooking oil 12. Glass 5. Car batteries 2. Paper 8. Rubber tyres 11. Plastics 10. Food waste 4.- 6 - Enclosure 2 Preliminary List of Recyclable Materials for EcoPark Phase 2 Tendering 1. Waste electrical and electronic equipment 13. Lube oil/mineral oil 6. Wood . Tetrapak) 9.e. Metals 7.g. inert construction materials) 3. Paper drink pack (e.