HK$50b deals for HK rail link expected

PUBLISHED : Friday, 16 July, 2010, 12:00am
UPDATED : Friday, 16 July, 2010, 12:00am

The value of new contracts awarded for Hong Kong's contentious high-speed railway will balloon to tens of billions of dollars this year, said a contractor bidding for the deals.

By the end of the year, new work awarded for the express rail link will probably be roughly three times the HK$18 billion given out so far, said Edmund Leung Kwong-ho, managing director of Hsin Chong Construction Group. 'It will be tens of billions of dollars by the end of the year.'

Since the project was approved by the Legislative Council in January, 14 major contracts worth HK$18 billion have been awarded by the MTR Corporation, which is entrusted by the government to design, build and operate the 26-kilometre rail link to Guangzhou, said MTR projects director Chew Tai-chong on Tuesday.

The total budget for the rail link, the world's most expensive railway per kilometre, is HK$66.9 billion and the project is scheduled for completion by August 2015.

Just months after street protests against the project, the controversial link is moving swiftly ahead. Protesters took to the streets and clashed with police in January as they voiced concerns about the high price tag and the environmental impact of the project. There was also criticism that the terminus for the line was in Shibi, Panyu - a 45-minute metro ride from Guangzhou's city centre in Tianhe.

'There is still a large part of the express rail contracts that are at the tender stage, including parts of the West Kowloon terminus, electrical and mechanical works,' Leung said. 'We are talking billions of dollars of tenders for which we will be bidding. We have submitted bids for some of them.

'We are working overtime and weekends to get in the tenders. There are many civil engineering projects with a limited number of contractors.

'Unless we do something silly, we should get some projects. I'm optimistic we will be winning enough projects to keep our team going for a few years.'

So far, Hsin Chong has won two express rail contracts. One involves a tunnel near the Shenzhen border. The company partnered China Railway Construction Corp (CRCC), a state-owned company, to win the project worth HK$1.69 billion.

Dragages Hong Kong, a French construction firm, recently won its second contract for the express rail link - a 2.95km twin-track tunnel and two single-track tunnels.

Although the size of the express rail contracts may be huge, profit margins are squeezed, Leung said. 'The problem for contractors like us is if we win a job by competitive tender the margins are normally small.

'When we bid for a job, we allow for contingencies of added resources and delays. If we minimise these, these contingencies become profits.'