The government has agreed to pay a total of HK$84.42 billion for the Express Rail Link to Guangzhou. Photo: RTHK
The MTR Corporation has reached an agreement with the government that would essentially see the railway pay for the entire cost overrun of its troubled Express Rail Link to Guangzhou.
In a filing to the Stock Exchange, the railway operator said it would pay a special dividend amounting to approximately HK$19.5 billion to the government, and HK$6.2 billion to other MTR Corporation shareholders. Payment will be made in two tranches, subject to approval from the MTR Corporation's independent shareholders.
In return, the government will inject up to HK$19.42 billion into the massive project – on top of the HK$65 billion earlier approved by the Legislative Council. Legco approval will also be required for the additional cash injection.
That will be enough to pay for the entire project – with the railway revising down its cost estimate from HK$85.3 billion, to HK$84.42 billion.
However, the MTR Corporation will have to shoulder any further costs on top of that.
The project has repeatedly been hit by costly delays. However, both the government and the MTR Corporation say there should be no further delays to the construction of the 26-kilometre-long Hong Kong section of the link, which should be completed in the third quarter of 2018.
The Secretary for Transport, Anthony Cheung, said the government reserves the right to take legal action against the MTR Corporation for its management of the project and the cost overruns. However, Cheung said both sides have agreed to defer any such action until after the line is opened in 2018 in view of the “extremely tight working schedule.”
Cheung also stressed that “tthis agreement between the government and the corporation… does not mean that the government is satisfied with the corporation’s performance as project manager.”
MTR chairman Raymond Ch’ien urged independent shareholders to approve the special dividend, which will be tabled in February, and for legislators to give the green light to the additional government funding required.
“We understand the public’s concern about the cost of the project, and hope our undertaking to bear any project costs exceeding 84.42 billion dollars, and our declaration of the special dividend, will demonstrate our commitment to the project,” he said.
New People's Party legislator Michael Tien, however, was critical of the "tit-for-tat" arrangement. The former KCRC chairman said while the government should be free to use dividends from the MTR any way they like, they're effectively required to inject the special HK$19.5 billion dividend back into the Express Rail link project. "You could say that as [a] taxpayer, I’m receiving 19 billion dollar less of schools and hospitals and roads," he said.
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Last updated: 2015-11-30 HKT 18:00
http://news.rthk.hk/rthk/en/component/k2/1226764-20151130.htm
