The MTR Corp (MTRC) is expected to get the go-ahead this week to start work on the HK$2.6 billion railway leading to the planned Disneyland theme park on Lantau. Informed sources said long-running talks between the MTRC and the government over the rail link at Penny's Bay had reached the final stage, with the project pending approval from the Executive Council. The MTRC is aggressively pursuing the rail link project after failing in its bid for the crucial Sha Tin to Central rail corridor two weeks ago. An MTRC spokeswoman said: 'We expect a conclusion soon. Once we have signed a project agreement with the government, construction works will start right away.' The project agreement covers a detailed plan for the 3.5km rail link between Yam O and Disneyland, possible commercial property development at Penny's Bay and the commercial return on the rail project. The Penny's Bay rail link, planned two years ago, is designed to carry visitors to the Disneyland theme park directly from Central in 15 minutes. It is scheduled for completion in the middle of 2005 to facilitate the opening of the theme park. According to the MTRC's annual report, the corporation plans to build a tourism-related commercial development of 100,000 square metres gross floor area adjacent to the planned Yam O MTR station. The Penny's Bay project is likely to be the MTRC's first rail project to operate with a required internal rate of return of 1 to 3 per cent above its capital cost. The internal rate of return formula was promised on MTRC's listing prospectus when the corporation went public in 2000. Although the Penny's Bay rail link is on a relatively small scale, analysts expect the project to be lucrative due to the large number of visitors the theme park is expected to attract. Merrill Lynch analyst Gary Chiu believed the Penny's Bay rail link would generate revenue of HK$60 million in 2006. He expected MTR trains would carry about eight million passengers through its Penny's Bay rail link to the theme park in 2006, while the system would account for 60 per cent of public transport to the theme park. The the government estimates it will draw five million visitors in 2006. The Penny's Bay rail link will be the latest MTRC tourism-related transport project after the corporation won a contract last week to build and operate a cable-car system bringing visitors from Tung Chung to the Big Buddha at Ngong Ping.