The government is in the final stage of negotiations on combining Hong Kong's two railway corporations and vows to divulge its decision as soon as a conclusion is reached, according to Chief Executive Donald Tsang Yam-kuen. Instead of unveiling new infrastructure projects, Mr Tsang offered an update on ongoing developments in the rail, road and air transport arenas in his maiden policy address yesterday. He pledged to complete various projects to meet the city's growing demand for public transport and resolve geographic hurdles in the Pearl River delta region with cross-border transport links. But topping his agenda is the proposed merger between Hong Kong-listed MTR Corp and government-owned Kowloon-Canton Railway Corp (KCRC), which has been under negotiation since the middle of 2002. Although Mr Tsang offered limited details on the talks, many analysts welcomed the latest progress report on the issue. Credit Suisse First Boston analyst Gary Chan said: 'I think the parties should come to a conclusion as soon as possible and work out terms mutually acceptable to all stakeholders.' Informed sources last week said the government favoured a partial merger that would involve MTR operating and maintaining KCR rail lines while the KCR would retain ownership of the assets. This approach was expected to be able to meet merger objectives such as bringing down rail fares, eliminating second boarding charges and enhancing efficiency. It is also believed to be a viable option to soothe the concerns of 360,000 minority shareholders, government bureaus, MTR and KCR staff members, passengers and taxpayers. Mr Tsang also vowed to complete KCR's Lok Ma Chau spur line, the South Kowloon rail link and the Sha Tin-Central rail corridor, as well as continue to press for the Hong Kong-Zhuhai-Macau bridge, the Hong Kong-Shenzhen western corridor and the express rail line connecting Guangzhou, Shenzhen and Hong Kong. He said $6.5 billion worth of infrastructure projects such as the second passenger terminal and the AsiaWorld Expo exhibition and event centre at Hong Kong International Airport at Chek Lap Kok would be built in the next two years.