MTR Corp Ltd told to shoulder cost-overruns for high-speed rail link

Projects, Slider 29 Jun 2015
MTR Corp Ltd told to shoulder cost-overruns for high-speed rail link

MTR Corp Ltd should shoulder the burden of cost-overruns if the budget of the already delayed and overbudget high-speed rail link to Guangzhou exceeds HK$80 billion,

Legislative Council transport panel chairman Michael Tien Puk-sun said.

In a 30-minute TV interview yesterday, Tien said he heard that the original estimate for the Guangzhou-Shenzhen-Hong Kong Express Rail Link in 2008-10 was HK$80 billion but the government talked it down to HK$65 billion.

Tien stated if it were true, it would help lawmakers develop a fuller picture for deciding how much extra money should be approved for the project.

“It was not an overbudget, it’s a difference in estimation of the cost based on different assumptions [from government and the MTRCL],” he said.

Tien, who in April estimated the project may eventually cost HK$90 billion, explained the reason for big difference between government and MTRCL estimates.

The market saw its worst times in 2008 and 2009, with the government basing the cost estimates for some seven or eight years later.

He said the contractors were “hungry” at that time and therefore submitted their tenders with an “extremely low price.”

However, the MTRCL did not trust the government’s estimate because it believed the “extremely low price” phenomenon would only last for a while.

Tien said both the government and MTRCL took a very hard line on who should shoulder the cost- overrun.

He said if it is eventually judged by the court, it would take three or five more years for construction to finish. If contractors do not receive fresh capital, they will let staff go and the whole project will become a “semi-unfinished project.”

With the coming year believed to be critical, he said he may support Democratic Party lawmaker Wu Chi-wai to launch the Powers and Privileges Ordinance to look into the incident.

MTRCL will submit the latest cost estimate this week.

Secretary for Transport and Housing Anthony Cheung Bing-leung said on Saturday he was worried the Express Rail might not be able to enter service in 2017.

 

 

 

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