Kowloon-Canton Railway Corp (KCRC) has no plans to privatise because investor interest would be undermined by heavy borrowing for the West Rail and East Rail projects, according to chairman Yeung Kai-yin. While he did not indicate the company's expected debt level, he said bank borrowing would be increased significantly by the developments. In a bid to retain cash reserves to develop the projects, he said no dividend would be declared to shareholders in the next 10 years. Under these circumstances, the KCRC would not be an attractive candidate for privatisation as nobody would be interested in buying the stock. Mr Yeung, speaking after yesterday's West Rail phase-one contract-signing ceremony, said future financing of the two developments would continue to depend on Government cash injections and bank borrowing. The KCRC would also consider tapping the US debt market when opportunities arose. The corporation had successfully raised US$1 billion though bond offerings in the European market in July, Mr Yeung said. The chairman said it was too early to predict whether KCRC would set lower fares for West Rail despite the construction cost being revised down from HK$64 billion to about HK$52 billion. The fare would be fixed when the project was nearing completion in 2003, he said, adding the market situation at that time would also be taken into account. The KCRC had so far awarded 21 civil construction and railway-operating contracts with an aggregate value of US$24.3 billion, Mr Yeung said. This represented more than 80 per cent of its present estimate of total contract values, excluding financing, land-acquisition and project-management costs. Among West Rail contracts to be awarded yesterday, a consortium led by Hong Kong Construction (Holdings) won the right to build Siu Hong and Tuen Mun stations, with a total value of HK$2.73 billion. INFRASTRUCTURE
