HK faces '$13.8b bill if express rail to China is scrapped'

HONG KONG • Hong Kong will face a HK$75.6 billion (S$13.8 billion) bill if an express railway linking the city to China is abandoned, the Transport and Housing Bureau said in a document to lawmakers.

The official estimates published were seen as an apparent effort to rebut calls to scrap the overbudgeted project.

The government will need to complete the remainder of the delayed project, including the terminus and surrounding roads, if construction stops due to pressure from some lawmakers, said the report.

"Abandonment of the project will result in huge abortive works leading to unnecessary wastage of social resources and billions (in) additional cost," it said.

The paper was submitted to the city's legislators last Friday after a cost blowout led to inquiries and calls from some lawmakers to scrap the 26km line, which connects Hong Kong to the southern Chinese cities of Guangzhou and Shenzhen.

If builders' contracts lapsed, the cost of a new tender process to restart the project would likely come to an additional HK$33 billion, according to the paper.

If the city's legislators do not approve a new funding request by February next year, contractor MTR Corp may issue a suspension notice to its contractors.

The delay will cost HK$233 million a month, the government estimates.

A contract lapse after six months of suspension would cost a total of HK$4.8 billion, the document said.

The rail project's economic return is forecast at 4 per cent, down from a 6 per cent estimate in 2009, said the document.

The government cited higher construction costs and slower economic and population growth in the Pearl River Delta region as reasons for the decline.

The express railway, originally slated to open this year, would not be ready until the third quarter of 2018.

Earlier this month, the transport minister apologised to the public over the delays and cost overruns affecting the high-speed rail link.

A version of this article appeared in the print edition of The Sunday Times on December 13, 2015, with the headline 'HK faces '$13.8b bill if express rail to China is scrapped''. Print Edition | Subscribe