MTR Corporation faces HK$3 billion bill as more railway projects go over budget

Cost overruns have hit two more railway projects, landing the MTR Corporation with a bill for an extra HK$3 billion.

As he announced the railway operator's interim results, CEO Lincoln Leong Kwok-kuen revealed the final bill for the 7km South Island Line would be HK$16.9 billion, an increase of HK$1.7 billion on the previous estimate. The 2.6km Kwun Tong Line extension will cost HK$7.2 billion, 22 per cent more than previously estimated.

The news is another blow to the MTR, which has been hit with a series of delays and cost overruns on its ambitious expansion projects, most notably the cross-border line to Guangzhou. This has tarnished the firm's reputation, and seen Leong's predecessor, Jay Walder, depart before finishing his contract.

Leong cited "challenging" works at Admiralty, where the South Island Line will connect to the network, and at the future Whampoa station on the Kwun Tong Line, for the delay, as well as "continued labour shortages".

"We understand the public concerns. But there are always unforeseeable challenges in building complex and massive rail projects," Leong said.

The completion date for the Kwun Tong work has also been pushed back by between three and six months from the original mid-2016 target. The opening of the South Island Line, which was originally budgeted at HK$12.4 billion, has already been pushed back from this year to the end of next year.

The MTR also revealed that it had told the government it would need an extra HK$1.27 billion for the Sha Tin-Central link which, like the cross-border line but unlike the two other projects, is being funded by the taxpayer.

And Leong warned delays caused by a huge archaeological find at the future To Kwa Wan station and the delayed handover of the site of Exhibition station in Wan Chai could further increase costs. A report will be submitted to the government early next year.

A Transport Bureau spokeswoman said it had "serious concerns about the substantial adjustment on the cost estimate" for the link.

Democratic Party legislator Wu Chi-wai said he saw "no choice but to accept" the news. "The government has to face squarely the fact the construction industry just can't cope," with an array of massive infrastructure projects.