Hong Kong taxpayers to bail out MTR for express rail link to Guangzhou: Government hopes Legco will agree to HK$19.6 billion in extra funding
Corporation will receive extra funding of HK$19.6 billion for express link to mainland, but will offset that by paying special dividend
The MTR Corporation will be bailed out by taxpayers upfront for the cost overrun of the long-delayed, high-speed rail link to the mainland, but the troubled operator plans to offset the amount by paying the government, its majority shareholder, a special dividend.
Under a controversial agreement announced on Monday, the Guangzhou-Shenzhen-Hong Kong Express Rail Link will be completed in the third quarter of 2018, with the cost revised to HK$84.42 billion - HK$880 million less than the corporation's last estimate.
The government hopes to persuade a highly sceptical Legislative Council to approve the HK$19.6 billion in extra funding by February. Almost exactly the same amount should eventually be recouped through a special dividend to be paid by the MTR.
"I must stress that this agreement … does not mean that the government is satisfied with the corporation's performance as project manager," Secretary for Transport and Housing Professor Anthony Cheung Bing-leung said yesterday. He stressed that the government reserved the right to take legal action against the rail operator over the delays and cost overruns after the mega project is completed.
If lawmakers on the Finance Committee reject the funding request, the 26km railway line linking West Kowloon to Guangzhou will stop in its tracks. It has already cost about HK$50 billion and is 75 per cent finished.
For its part, the MTR has agreed to pay dividends totalling HK$25.76 billion at the rate of HK$4.40 per share - four times last year's payout - in two stages.