Hong Kong MTR

Cost of Sha Tin-Central rail link balloons to HK$87 billion, making it the most expensive rail project in Hong Kong history

Much-delayed project now expected to come in at HK$16.5 billion over budget

PUBLISHED : Tuesday, 05 December, 2017, 7:07pm
UPDATED : Wednesday, 06 December, 2017, 1:41pm

The cost of Hong Kong’s new rail link from Sha Tin to Central has ballooned to HK$87.32 billion (US$11.17 billion), making it the most expensive rail project in the city’s history, officials said on Tuesday.

The MTR Corporation’s 17km cross-harbour rail line is now ­expected to come in at HK$16.5 billion above its original HK$70.82 billion budget. The corporation had earlier given the cost of HK$79.8 billion, including preparatory work. That cost of that ­preparatory work was excluded from Tuesday’s announcement, meaning the actual cost could ­exceed HK$97 billion.

An MTR Corp source denied there was any miscalculation by the rail company regarding the overrun, which it said was caused by multiple factors.

“Engineers are not God. They can’t predict everything,” the source said. “The complexity of the underground work is not something that can be fully controlled.”

The project will be even more expensive than the Hong Kong section of the controversial high-speed rail project linking the city with Shenzhen and Guangzhou, which is set to cost HK$84.4 billion after overrunning by HK$19.6 billion in 2015.

Construction of both the Sha Tin-Central link and the high-speed rail project is funded by the government and carried out by the MTR.

A Transport and Housing Bureau spokesman declined to comment on the latest cost estimate but stopped short of rallying behind the MTR – of which the government is the majority shareholder with a 75 per cent stake.

“The government reserves comment on the cost estimate submitted by MTR Corp at this stage. The Highways Department will ask MTR Corp to provide detailed information, and in collaboration with its monitoring and verification consultant, critically scrutinise … [and] see if there are sufficient justifications for the cost estimate,” the statement read.

Engineers are not God. They can’t predict everything

Following confirmation, the government would then seek extra funding from the Legislative Council “in a timely manner”, the spokesman added, so that construction works could carry on as planned.

The corporation blamed the extra spending on preserving heritage sites uncovered near the new Sung Wong Toi station, a delay in the handover of construction sites from the government and incomplete works at the Exhibition Centre station in Wan Chai when it was handed over from the government.

The government commissioned additional foundation works at Exhibition Centre station too, MTR Corp said.

The rest stemmed from labour shortages, unfavourable ground conditions and tweaks to the design and methodology, it said.

The source declined to be drawn on whether this would be the last overrun.

“This rail link is owned by the government. Now we should give some time for the government to scrutinise the findings. It will be up to the government to decide how to deal with the overrun and whether it needs to seek additional funding from Legco,” the source said, adding that as of end of September, MTR had used up more than HK$40 billion out of some HK$70 billion in approved funds in its reserve.

Lawmaker and rail expert Michael Tien Puk-sun said the HK$16.5 billion overrun was acceptable but not the delays caused by the late handover of government sites.

“It’s like an orchestra performance. Each musician must follow the conductor. They can’t perform in their own ways, otherwise the whole musical piece will be out of rhythm,” he said.

Cost overrun for Hong Kong’s Sha Tin-Central MTR Link could be HK$16 billion, lawmaker says

The Civic Party’s Jeremy Tam Man-ho did not indicate whether he would back or reject the funding request, saying there was insufficient information available.

“We need to know the exact breakdown of the cost overrun, rather than a lump sum,” he said.

He also criticised the government’s failure to foresee a manpower shortage to handle multiple large-scale infrastructure works, resulting in surging labour costs as firms have to lure workers with higher wages.

Completion of the Sha Tin-Central rail link will be in two stages. The Tai Wai-Hung Hom section is expected to be finished in the middle of 2019, with the cross-harbour section to Admiralty done in 2021.