MTR chief warns of 'catastrophic' aftermath if Legco votes down high-speed rail after shareholders let MTR take on potential further cost overruns
MTR Corp chief appeals to pan-democrats to stop delaying debate and approve extra HK$19 billion needed to complete the high-speed link project
MTR Corp management warned of “catastrophic” consequences if legislators reject a proposal to plug the HK$19 billion funding gap facing the much delayed cross-border high-speed railway after its independent shareholders voted almost unanimously for the funding arrangement.
Hours after 99.83 per cent of the vote of independent shareholders backed the funding proposal at a meeting yesterday, Chief Executive Leung Chun-ying said the government would try its best to get approval from the Legislative Council - the last hurdle for the extra HK$19.6 billion needed for the Hong Kong section of the Guangzhou-Shenzhen-Hong Kong Express Rail Link.
Secretary for Transport and Housing Professor Anthony Cheung Bing-leung hinted that the government might consider as early as today whether to bypass Legco’s public works subcommittee and go directly to the Finance Committee.
MTR chairman Frederick Ma Si-hang called on pan-democratic lawmakers to “ raise their hands high in mercy” to give the project a pass this time.
“From MTRC’s perspective, our biggest concern is the filibuster in the Legco,” he said.
READ MORE: 7,000 jobs could be lost if Hong Kong high-speed rail link is suspended, says MTRC boss
Ma said the HK$65 billion budget approved by Legco in 2009 would be used up by mid-year and the company needed to notify its building contractors by next month to allow time to make preparations, whether Legco gave the green or red light.
“The consequences would be catastrophic in terms of unemployment and reputational damage,” Ma warned if lawmakers rejected the extra funding.
“Hong Kong would become an internal joke in the international construction industry. What’s more, we would lose a key rail connection with the mainland’s high-speed railway network which would link Hong Kong to other parts of Asia and Europe.”
He claimed last week that between 5,000 and 7,000 workers and engineers in the construction industry would lose their jobs if work was suspended.
MTR projects director Philco Wong Nai-keung said yesterday if the project was halted, more than 40 major construction contracts and 60 minor ones would have to be suspended or cancelled, resulting in heaps of lawsuits seeking compensation.
Under a new agreement signed with the MTR Corp in November, the government will ask Legco to approve HK$19.6 billion in extra funding by February. The same amount will eventually be recouped through a special dividend to be paid by MTR Corp.
It has pledged to pay HK$25.76 billion in dividends at the rate of HK$4.40 per share to its shareholders in two stages.
The amount will include HK$19.5 billion to be paid to the government, which holds 75.7 per cent of MTR shares.
READ MORE: Hong Kong’s new rail chief Frederick Ma has his work cut out to put MTR back on track
The remaining HK$6.2 billion will go to 200,000 independent shareholders who hold the other 24.3 per cent of MTR shares.
The landslide result came despite a protest held by League of Social Democrats members and pan-democratic lawmakers ahead of the meeting.
A small shareholder surnamed Lee told the shareholders meeting that the MTR should not dig itself any deeper into the high-speed railway project, which he claimed would take 47 years to make a return based on the economic benefits data mentioned in a Legco paper. “I can’t imagine why we have to take the attitude of a gambler on the project ... why is putting a stop to further losses so frightening?”
Pressed by Legco member and shareholder Kwok Ka-ki about who would bear ultimate responsibility for potential liabilities in case of further cost overruns beyond the project’s latest HK$84.4 billion, Ma said: “If management are found to have made mistakes several years later, they have to bear responsibility,” without elaborating.
District councillor Roy Tam Hoi-pong said the vote was “clearly dominated by big institutional investors”, adding opposition groups would find a way to stop the project in Legco.
Albert Lai Kwong-tak, convener of Professional Commons, an independent public policy think tank, said that the warning about “catastrophic consequences” by MTR Corp management was “totally wrong”.
“Contract suspension doesn’t mean the workers will lose their jobs,” he said, as the transformation of those sites would need workers. There was also a worker shortage in the rail company’s other construction projects, which could easily absorb labour from the high-speed railway project, he said.
However, Ian Chung, chairman of the Association of Consulting Engineers, said such transformation projects needed time to be designed and approved, and workers would still face immediate unemployment if the project was suspended.
Additional reporting by Ng Kang-chung
