bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Denise Tsang

Rail giant MTR Corp has committed to a 22 billion yuan (HK$24.96 billion) subway project in Hangzhou, riding on the mainland's spending spree on infrastructure to boost the economy.
The semi-privatised  rail service provider said yesterday it had signed a principle agreement with state firm Hangzhou Metro Group over the building,  operation and maintenance of Metro Line 1, the first of eight planned subway lines in the coastal city.
The  project signals the early beginnings  of the country's ambitious 4 trillion yuan economic stimulus package, with the central government calling for speedy approval of expenditure and private investments in railways, utilities, property,  education and the environment.
It is the corporation's third rail project on the mainland involving direct investments after ventures in  Shenzhen and Beijing.
MTR chief executive Chow Chung-kong said the company  would contribute its expertise and experience in operating rail services.
Under the deal, the 48km Metro Line 1 will cost 22 billion yuan, of which 63 per cent or 13.86 billion yuan will be largely building  costs to  be borne by Hangzhou Metro.
The remaining 37 per cent or 8.14 billion yuan cost covers electrical and mechanical systems and will be shared between the MTR and Hangzhou Metro through a joint venture.
This means that MTR, which will hold 49 per cent of the joint venture,  will have to spend  3.98 billion yuan for the entire project.
MTR is responsible for running the rail project for 25 years.
An MTR spokeswoman said they  were negotiating terms on profit sharing, the rate of return, fare structure and details of a final contract on the deal.
She added that MTR and Hangzhou Metro separately entered into an agreement yesterday to explore the feasibility of developing properties along the metro line.
That is similar to the utility's funding model in Hong Kong, where residential and commercial properties are developed above MTR stations in order to fund rail investments and create demand.
Running through 30 stations, the south-north subway line will connect secondary cities, namely Xiasha, Linping and Jiangnan. Building  is under way and completion is due in 2012.
Some analysts said the project would provide a driver of longer-term growth for MTR, which merged with the suburban rail network of Kowloon-Canton Railway Corp 13 months ago and is competing fiercely with other modes of transport in its home market.
All aboard
Project is MTR's third direct investment after Shenzhen and Beijing
With a 49 per cent stake in the venture, MTR's share of the cost is about, in yuan: yuan 4b



MTR rides infrastructure spree with 22b yuan subway agreement