Hong Kong - The territory will have to pay about 2 billion Hong Kong dollars (256 million US dollars) more for the water it imports from China as a result of inflation and an appreciating Chinese currency, a media report said Thursday.

Under a new three-year deal agreed between negotiators from Hong Kong and Guangdong province, Hong Kong must pay a lump sum of 9.4 billion Hong Kong dollars to import 1.1 billion cubic metres of water a year, the South China Morning Post said. This is an increase of 1.96 billion Hong Kong dollars compared with the current agreement.

A government spokesman said the increase was due to stronger yuan, which had risen 14 per cent against the Hong Kong dollar in the past three years, and 3 per cent annual inflation in the region.

The water is supplied by pipeline from the Dongjiang river in Guangdong province and accounted for about 80 per cent of Hong Kong's supplies last year. But fluctuating rainfall and a development boom in the Pearl River delta had called into question the long-term use of the river as a water source.

Water is relatively cheap in Hong Kong, with one cubic metre costing up to 9 Hong Kong dollars. Critics claim the low price means people have little incentive to save or conserve water.

Damien Ku, a former senior official at the water supplies department, said without financial deterrents, no one would care about saving water. (dpa)