The government says it has not yet finalised its policy on adjusting public transport fares despite reports that a mechanism allowing a reduction of up to 10 per cent had been worked out. A Transport Department spokeswoman said yesterday the administration would continue discussions with public transport services providers - primarily rail and franchised bus firms - before announcing the fare changes. Rail carriers the Mass-Transit Railway Corporation (MTR) and Kowloon-Canton Railway Corporation, Hong Kong's largest franchised bus firm, Kowloon Motor Bus (KMB), and Hong Kong island-based franchised bus operator New World First Bus said they had not heard of any finalised fare policy. 'It is harmless to study a fare-adjustment mechanism, but we have no idea of the details of how it works,' said outgoing MTR chairman and chief executive, Jack So Chak-kwong. The proposed fare mechanism, the brainchild of Secretary for Environment, Transport and Works Sarah Liao Sau-tung, aims to set a more transparent and rational mechanism stipulating rises and cuts in public transport fares. The government reportedly worked out a formula to allow a 10 per cent bus fare cut. 'We have not received any proposed formula from the government,' a KMB spokeswoman said. 'We have relayed our views to the government on the fare policy. We hope that the mechanism will really allow fare increases and decreases.' Analysts said the KMB was vulnerable to fare cuts due to its 13 per cent return on the average net fixed asset value, a relatively high return compared with other transport utilities.