Funding wrangle puts brakes on project

PUBLISHED : Thursday, 07 October, 2004, 12:00am
UPDATED : Thursday, 07 October, 2004, 12:00am

Finance seems to be at the heart of delays to building the new Mass Transit Railway line to Western Island, despite the two-decade anticipation by local residents and councillors.

The proposed $15 billion development for the Western and Southern districts could cost the government $7.5 billion in subsidies for the MTRC, and would require approval from the Legislative Council.

But the Environment, Transport and Works Bureau is critical of the patronage forecast for the Western Island line. The MTRC forecasts usage of the Western and Southern Island lines to be about 315,000 passengers per day by 2016, when the population of Southern and Western Island is predicted to be 440,000.

While the government said the $7.5 billion in subsidies required 'careful consideration to ensure the best use of community resources', a study by the University of Hong Kong's Centre of Urban Planning and Environmental Management concluded that the lines offered 'considerable external benefits' to the private sector and government.

The study, undertaken last year at the request by the MTRC, found that the lines could also help rejuvenate the Western districts and enhance employment.

While it would be easier for the MTRC to build the extension if it raised the finance itself, it's unlikely to abandon its quest for a government subsidy.

'As the forecast rate of return of the project is lower than the required commercial rate of return, the project is considered not financially viable from an investment point of view,' the MTRC spokeswoman said.

'As the government and society will reap most of the social and economic benefits generated by the proposed new railway, the corporation suggests that the government should consider providing financial support of a maximum of half of the project cost.'