Hong Kong taxpayers will have to bail out The MTR Corporation upfront for the extra costs incurred by the Guangzhou-Shenzhen-Hong Kong Express Rail Link.
SCMP reports that MTR plans to offset the amount by paying its majority shareholder, the government, a special dividend.
An agreement announced yesterday revised the cost of the overrun project to HKD84.42 billion, which is HKD880 million under the previously announced estimate.
The government is reportedly hoping to persuade LegCo to approve HKD19.6 billion in extra funding by February. The special dividend MTR has promised should eventually recoup the exact amount of money.
Secretary for Transport and Housing Professor Anthony Cheung stressed that the agreement does not indicate the government’s satisfaction with MTR’s management of the project, and emphasised the government’s right to legal action against MTR once the project is completed.
If LegCo rejects the funding request, production of the 26km rail link, which is currently 75 percent finished, will halt. The project has already cost approximately HKD50 billion so far.
MTR has agreed to fork out a total of HKD25.76 billion in dividends in two stages, at the rate of HKD4.40 per share (four times last year’s payout).
The government, which holds 75 percent of the shares, will get HKD19.5 billion, while other shareholders will receive HKD6.2 billion.
While this proposal is still subject to approval by shareholders, LegCo’s deputy transport panel chairman, Tang Ka-piu, said it would “definitely” get the go-ahead, as no shareholder would turn down such a large sum.
In addition, MTR Corporation has also agreed to shoulder any extra costs on top of the agreed total HKD84.42 billion.
Following yesterday’s announcement, many lawmakers voiced their doubts, with former KCR chairman Michael Tien calling the agreement a “trick”, saying that the government could have put the money towards other issues.
Lee Cheuk-yan, chairman of the Labour Party, said the ultimate loser in this situation would be the taxpayer.
However, Chief Executive CY Leung spoke in favour of the agreement this morning, saying that capping the expenses of the project will better protect the taxpayer.
The 26km rail link, which would run between West Kowloon and Guangzhou, was originally due to be completed in 2015, but has been pushed back to the third quarter of 2018.
Photo: Wikipedia
