China's railway rush on a track to trouble
The good times are gone for Hong Kong's metro rail development, and the blistering pace of rail development on the mainland is sowing serious problems that are likely to emerge in the years ahead, say rail experts.
'In Hong Kong, the golden days [of metro] are gone' said Lee Kang-kuen, head of the Hangzhou project for MTR Corporation, the Hong Kong-listed firm that builds and operates all metro rail systems in the city. 'Despite the good development of metro, we have come to a critical stage. There are major bottlenecks facing Hong Kong metro in the next decade. Politically, the government assigning land to the MTR has become hot politically. It's no longer viable to subsidise railway projects in Hong Kong [with property development].'
Lee's warning was seconded by others at the recent China RailWorld Summit in Beijing, and the outlook was also cloudy for the mainland, though the issue there was the future consequences of rapid development.
There was now more political activism in Hong Kong, said another transport consultant, who asked not to be named.
'Some opposition politicians will complain the cost of an MTR project is too much or some local residents may lose out,' he said. 'It's not a strictly transport point but a political point. Even mundane issues are becoming increasingly controversial.'
Transport projects were costly, and their benefits took years to come, said the consultant.
'The public often don't realise the benefits. Rightly or wrongly, the Hong Kong government has lost the trust of the people in transport projects.'
In January last year, protesters took to the streets and clashed with police in demonstrations against the Express Rail Link, the planned high-speed rail line between Hong Kong and Guangzhou. They were concerned about the HK$66.9 billion cost, the environmental impact of the project and the effect on villages in the New Territories that the rail line will pass through.
In Hong Kong, ever-rising housing prices are a sensitive political topic, as homes have become unaffordable for many people. Yet metro rail lines want to maximise their revenue from property development, which creates a contradiction, said Dennis Li, director of MetroSolutions, a Hong Kong transport consultancy.
Under the MTR's business model, property developers build on land around MTR stations, from which the MTR gets a share of the property sales. The MTR benefits from higher property prices but buyers are squeezed.
'I agree the glory days of Hong Kong metro are over,' said Li.
Most of the highly lucrative rail lines had already been built in Hong Kong, he said. Future rail lines would have lower profitability on the whole.
'If they are so profitable, why not build them earlier?' he said.
Another bottleneck facing metro development in Hong Kong is government bureaucracy, said the MTR's Lee. 'Most [railway projects] involve many government departments. We must deal with a dozen bureaucratic departments at the same time, satisfying their secret agendas. That will be very difficult.'
On the mainland, there are few bottlenecks impeding the rapid rollout of urban rail systems, but problems were being created for the future, said Lee.
'The rapid growth of China's urban railway is planting a lot of time bombs for the future,' he said. 'A lot of cities along the China metro railway are being built at super-fast speed. In five years, asset replacement will be a major issue for metros in China.'
Li agreed with that view. 'If you're building so many railways at the same time, when you need to upgrade components you have a problem,' he said. 'Now you have the money to build railways, but it doesn't mean you have the money to upgrade them in the future, because they all depreciate at the same time.'
For 2011 to 2015, Beijing has budgeted 1.25 trillion yuan (HK$1.48 trillion) to build 2,200 kilometres of rail lines in 16 cities, almost tripling the existing 1,400 kilometres of urban rail. Analysts expect China to overtake the United States in having the most extensive urban rail networks in the world by next year.
Apart from the financial cost, upgrading rail lines also requires time and labour and is made difficult because the work needs to be done during non-traffic hours, said Li. Hong Kong faced a similar problem because it was building so many rail lines, Li said.
The MTR has completed on average about one rail line every three years, he said. 'Now in Hong Kong they want to build five rail lines at the same time. There is a problem. It's a scale MTR has never experienced. I don't see how we can do five railways at the same time.'
The five lines are the Express Rail Link, the West Island Line, the South Island Line, the Sha Tin to Central Link and the Kwun Tong extension.
In October 2008, chief executive Donald Tsang Yam-kuen launched 10 major infrastructure projects at an estimated cost of HK$250 billion, including rail lines like the Express Rail Link and the Sha Tin to Central Link.
Li estimated the depreciation problem of the MTR's new rail lines would become apparent around 2025 - based on a completion date of 2015 and a depreciation period of 10 years, which is the MTR's depreciation policy.
'In Europe you didn't have such a bonanza, building so many railways at the same time,' said Li. 'Paris' metro was not built in one day, nor was London's.'
'The rush to construct subways in China can have a serious problem that is not apparent now but may surface in the future,' said Hah Foo Kian, a mainland-based executive at Evans & Peck, an international infrastructure consultancy. 'Building subways for second- and third-tier cities has become a trend. Everyone wants one, mostly motivated by the political performance of local government officials.' But many local governments spend little time studying the feasibility and business viability of investing in subways, he said.
Pressured by government officials, construction time is being compressed to an extremely short period in some mainland city metro rail projects, Hah said. 'Contractors tend to take more risks to speed up construction. We witnessed many contractors disregarding good practices, taking fewer precautions to protect site and workers' safety to speed up construction.'
As a result, the quality of construction of some mainland urban railway projects may suffer, Hah warned. 'This may not become apparent immediately, but there is a risk that, in 10 to 20 years, many quality problems will surface on a massive scale.'
There is also the question of competition from other forms of transport. 'In some Chinese cities I worked in, the metro is rolled out quickly, but bus operators are reluctant to alter their routes,' said Richard Di Bona, a director of LLA Consultancy. 'Bus networks are typically 30 to 40 years out of date. If buses don't work well, you're undermining access to rail.'