Express rail approved - at 65pc price rise

PUBLISHED : Wednesday, 21 October, 2009, 12:00am
UPDATED : Wednesday, 21 October, 2009, 12:00am

The Executive Council has given the green light to the controversial cross-border rail express with a price tag of HK$65.2 billion - a 65 per cent blowout from the original estimate - which means the government will recover less than half of the construction cost in 50 years.

The Transport and Housing Bureau said HK$53.7 billion of the cost was for the railway, while the remaining HK$11.5 billion was for related works including roads around the West Kowloon terminus.

The 2007 estimate of HK$39.5 billion included all these works.

The bureau spokesman said the line was expected to earn only HK$28.1 billion in 50 years, not even half the construction cost. A key reason for this is the fares - HK$45 to HK$49 for the 14-minute trip to Shenzhen and HK$180 for the 42-minute trip to Shibi in Guangzhou.

These compare with HK$31.30 for the 40-minute East Rail trip from Hung Hom to Lo Wu and HK$190 for the present Guangzhou through-train - although that ends in the city centre, while the new express rail will terminate in suburban Panyu.

With the much higher cost, the economic rate of return, calculated by putting a dollar value on time savings, has shrunk from 9 per cent to 6 per cent, compared with 12 per cent for the Hong Kong-Zhuhai-Macau bridge, and 8 to 10 per cent for metro rail lines.

Secretary for Transport and Housing Eva Cheng said the government did not plan to make a profit from the line. 'The function of this rail is to link us up to 16,000km of the national rail network. It is very important for our integration with the mainland and has to be built.'

The bureau said most of the cost increase came from the non-railway works, which could not be accurately estimated before the detailed design was done. The economic benefits to the community had not been calculated, a spokesman said.

'Suppose the link can bring 10 per cent more mainland visitors to Hong Kong in 2016, and each spends an average of HK$5,000 during their stay, it would amount to HK$3 billion in revenue a year. In this sense, the project cost could be offset in 10 to 20 years.'

Government engineers expect daily patronage to reach a maximum of 116,400 in 2016, a year after the link's expected completion and 199,700 by 2031. The spokesman said a 'very prudent assumption' had been adopted in calculating passenger growth; as in Europe, high-speed rail lines could generate up to 30 per cent additional rail patronage.

Officials expect that initially there will be a train to Shenzhen every 15 minutes and to Guangzhou every 30 minutes. The spokesman said in time the frequency of trains to Shenzhen could be increased to every 5 to 10 minutes during peak hours.

The link is expected to snatch 3,800 passengers a day from the through-train, but other transport - including East Rail, buses and ferries - are still expected to enjoy growth because more people will be crossing the border by then.

Engineers from Professional Commons - the group that proposed moving the terminus from West Kowloon to Kam Sheung Road - said it regretted the government had not considered its proposal, which may reduce the cost by two-thirds.

Ronnie Tong Ka-wah of the Civic Party and Democrat Albert Ho Chun-yan both said their parties might not approve funding if the government failed to explain the cost blowout. But the administration is expected to be able to secure sufficient support from lawmakers when the project is tabled next month.