Hong Kong MTR

Cost of high speed rail link swells to HK$80b in light of two-year delay

MTR is adding HK$13 billion to price tag following announcement of two-year delay, says lawmaker, and he claims estimate is optimistic

PUBLISHED : Wednesday, 06 August, 2014, 4:50am
UPDATED : Wednesday, 06 August, 2014, 9:24am

The delay in the construction of the cross-border express railway could see its cost rise from HK$67 billion to HK$80 billion, lawmaker Michael Tien Puk-sun quoted sources at MTR as saying.

The claim was made as MTR contractors were said to be facing cash-flow problems as a result of the delay - which has pushed back completion of the high-speed link from West Kowloon to Guangzhou by two years, to 2017.

"A lot of people know about the latest estimate," said Tien. "But [the government and MTR] are still in talks over who should pay for it, and that's why they do not want to announce it yet," added the former chairman of the Kowloon-Canton Railway Corporation, whose operations merged with the MTR in 2007.

Tien, who represents the New People's Party, said he believed the HK$80 billion figure was optimistic. "No one knows what will happen" in the course of the construction, he added.

As to whether the MTR, government or contractors should fund the extra costs, Tien said that should depend on the reasons behind individual claims.

The MTR's announcement of the delay in April had been unexpected. The company blamed a broken tunnelling machine at Yuen Long and difficult ground conditions at the West Kowloon terminus.

Last month, the MTR announced that its chief executive, Jay Walder, is to step down on August 15, a year earlier than scheduled, after an internal report criticised his "poor judgment" on overseeing the project.

Derrick Pang Yat-bond, deputy chairman of Chun Wo Development Holdings, said his company has a HK$1 billion contract to pave the track beds for the express railway. The works should have started a year ago but were delayed because prerequisite work by other contractors had not been completed.

He said there was anxiety among some contractors who were strapped for cash to cover extra costs incurred by the delay, and some had submitted claims to the MTR for the sums involved.

In answer to an inquiry from the Post, barrister Albert Luk Wai-hung said he believed the government should pay for additional costs incurred due to "unforeseen circumstances"; the MTR should pay for those due to "poor supervision".

According to the Transport and Housing Bureau, as of March 31 it had received 611 valid claims from contractors, totalling about HK$10.7 billion.

The bureau declined to provide the latest cost estimates but confirmed it had received an assessment from the MTR.

A spokesman added that the MTR was currently conducting a detailed assessment of contractors' claims.

An MTR spokesman also refused to reveal any latest costing, saying only that its assessment has been submitted to the government.