Hong Kong Ferry Disaster
Rescuers approach a partially-submerged boat after two vessels collided in Hong Kong.

At least 36 people have died and many more are injured as two passenger boats collided off Lamma Island, south of Hong Kong.

The deceased were passengers of a vessel belonging to the power company Hong Kong Electric. The company was taking staff and family members to watch a fireworks display to mark the mid-autumn festival that coincides with China's National Day on 1 October.

"Our ferry left Lamma island at 8:15 pm to watch the fireworks display out at sea, but within a few minutes, a tugboat (ferry) smashed into our vessel," Yuen Sui-see, a director of Hong Kong Electric, told Reuters.

After its collision with the ferry, owned by Hong Kong and Kowloon Ferry Holdings, the Hong Kong Electric vessel began sinking quickly.

The cause of the collision is unclear and is being investigated. "We must understand the reason for this incident," said CY Leung, chief executive and president of Hong Kong's Executive Council.

"Our captain is not well and we have not been able to talk to him so far," said a spokeswoman for Hong Kong and Kowloon Ferry Holdings.

As many as 28 people were declared dead at the scene of the accident while eight others were later pronounced dead at the hospital.

"Over 100 people were sent to five hospitals during the incident; nine of them have sustained serious injuries or are in a critical condition," said the Hong Kong government.

"Within 10 minutes, the ship had sunk. We had to wait at least 20 minutes before we were rescued," one of the survivors told Reuters.

Hong Kong's Fire Services Department says it pulled 123 people from the water in the aftermath of the accident. Rescue operations involving diving teams, search helicopters and boats are ongoing since the authorities are not ruling out the possibility of people still trapped inside the vessel.

"We will continue our search. We also don't rule out that some may have swum to shore themselves and haven't contacted their families and so may not be accounted for," said Ng Kuen-chi, acting deputy director of fire services.

The other boat, though slightly damaged, docked in Lamma Island, a popular destination for tourists and expatriates. It reportedly had over 100 passengers and many of them suffered injuries and were taken to hospital.

The current death toll suggests the collision is Hong Kong's deadliest shipping accident since 1971, when a typhoon caused the ferry Fat Shan to capsize, killing 88 people.

Hong Kong is one of the busiest shipping routes in the world, although accidents are rare.