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Anthony Cheung addresses the MTR row. Photo: Franke Tsang

No carte blanche for Hong Kong's MTR over high-speed railway, says minister

Anthony Cheung confirms rail firm is seeking additional management fees

The MTR Corporation has demanded extra "management fees" from the public coffers - possibly running into billions of dollars - on top of construction expenses incurred by the repeatedly delayed and increasingly costly rail link to Guangzhou.

The railway operator sank deeper into the mire yesterday after the government confirmed media reports that it was seeking more management fees, which are calculated as a percentage of total construction cost.

Contractual agreements signed with the government years ago already give the MTR HK$4.59 billion in management fees, if everything goes smoothly.

Secretary for Transport and Housing Professor Anthony Cheung Bing-leung would neither confirm nor deny that the MTR was seeking an additional HK$2 billion, as suggested in reports. But there would be no carte blanche, he said, amid criticism that the government had never set a cap on the management fees.

Cheung insisted the government "will look critically at the revised cost estimates" before ascertaining an actual amount.

"The MTR is the project manager. If there is a legitimate reason for the rise in costs, of course that should not be borne by the manager. That is the whole spirit," he told a Commercial Radio programme.

"But this spirit should not be pushed to an extreme - that even if I am not managing it well, you will pay for me. That shouldn't be the case."

A lawmaker also put the blame on the MTR, saying if it was claiming a gigantic chunk of taxpayers' money for manpower expenses, that move showed a lack of political wisdom.

Michael Tien Puk-sun, chairman of the Legislative Council's transport panel, warned the MTR's demand might provoke public anger and backfire.

The worst-case scenario for the operator, he said, would be for the government to open up the market for future railway projects.

Tien also called the deal an "unequal treaty" for the government. "There seems to be an adverse incentive on offer," he said. "Logically, there should be a punitive payment when the project is delayed. But now the MTR is still contractually justified in claiming further payments."

Intense controversy surrounds the 26km high-speed railway project which has gone way over its original budget of HK$65 billion and missed this year's deadline for completion.

Some 70 per cent of the construction work has been completed - but the opening date has been put back to the third quarter of 2018, while the latest cost of linking the city to Shenzhen and Guangzhou stands at HK$85.3 billion.

This article appeared in the South China Morning Post print edition as: No carte blanche for MTR, says minister
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