The KCRC board threw plans to merge Hong Kong's two main rail companies into turmoil yesterday, with chairman Michael Tien Puk-sun saying the benefits would be outweighed by the drawbacks.
The KCRC's opposition to the merger comes as the government conducts a feasibility study into merging the Kowloon-Canton Railway Corporation (KCRC) with the Mass Transit Railway Corporation (MTRC). The study is expected to be completed next month.
Mr Tien's opposite number at the MTRC, Jack So Chak-kwong, has already spoken out in favour of the merger.
Mr Tien said yesterday the KCRC had submitted its views to the government and its board had concluded that 'the cons of the merger outweigh its pros'.
He said that as the two operators had different rail-development models, it would be difficult for a merged body to launch new projects.
'As we are more of a pure-transport model, whereas the MTR focuses more on real estate, it means our cost of capital-raising is relatively lower than the MTR's. Hence we can demand a lower rate of return on new projects,' he said.
'If we merge, our capital outlays will become higher and we may have to adopt different views on our new projects.'
