PUBLISHED : Saturday, 12 December, 2015, 1:43am
UPDATED : Saturday, 12 December, 2015, 1:43am
The MTRC and the government announced that the latest estimate for the project was HK$84.42 billion, up HK19.6 billion from the original plan. Photo: Felix Wong
The cost of abandoning the high-speed rail project would total HK$75.6 billion, according to the latest official estimates, published in an apparent effort to rebut calls to scrap the over-budgeted project.
But the forecast for the economic return from the Guangzhou-Shenzhen-Hong Kong railway has been adjusted downwards, from a 2009 estimate of 6 per cent to 4 per cent.
A Transport and Housing Bureau paper sent to lawmakers yesterday cited an increase in capital costs for construction as well as slower growth in the population and economy of the Pearl River Delta.
The latest figures add to the controversy surrounding the project, two days after the justice minister vowed to consider allowing mainland immigration officers to work at the future West Kowloon terminus of the high-speed railway.
Lawmakers are due to consider by February whether to grant extra funding to the tune of HK$19.6 billion to the ill-fated project, expected to cost HK$84.42 billion if it can be completed by the third quarter of 2018.
The worst case for the government would be to abandon the whole project, an unlikely scenario given the pro-establishment majority in the legislature.
"If the [rail] project were abandoned, the entrustment cost of HK$65 billion would be wasted [while] the government would still need to complete most of the remaining work," the bureau said.
The remaining work, which includes the terminus and surrounding roads, would cost HK$10.6 billion, while maintenance would cost up to HK$100 million a year.
"Abandonment of the project will result in huge abortive works leading to unnecessary wastage of social resources and billions [in] additional cost," it said.
The government also noted the huge additional cost for late approval of funding.
If lawmakers do not approve the funding request by February, the MTR Corporation may need to issue a suspension notice to its contractors.
In that case, an additional cost of HK$4.8 billion would be incurred.
The MTR Corp can suspend the project for up to six months, under its terms with contractors.
If lawmakers approve funding after the contracts lapse, new tenders would be required to get the construction restarted, but that would take two to three years.
The government estimated an additional HK$33 billion in construction costs in this case.
Democratic Party lawmaker Wu Chi-wai said the report would not change his decision to vote no to the extra funding request.
http://m.scmp.com/news/hong-kong/economy/article/1890134/cancelling-high-speed-rail-project-would-cost-hk75b
