Date
17 October 2017
MTR acting chief executive Lincoln Leong admitted that delayed construction work will mean higher costs at two rail line projects in Hong Kong Island. Photo: HKEJ
MTR acting chief executive Lincoln Leong admitted that delayed construction work will mean higher costs at two rail line projects in Hong Kong Island. Photo: HKEJ

Island line project delays to push MTR costs up nearly 10%

Delays in the South Island Line (East) and the West Island Line rail works could add about 9.8 percent to MTR Corporation’s (00066.HK) project costs, sending the combined amount to HK$33.7 billion (US$4.35 billion), the Hong Kong Economic Journal reported Tuesday.

The latest estimate of the cost of the South Island Line (East) stands at HK$15.2 billion, and that of the West Island Line at HK$18.5 billion, the report said, citing MTR acting chief executive Lincoln Leong.

The higher costs are mainly due to a delay in the construction of Sai Ying Pun station entrances, and the complexity of some work at Admiralty, said Leong, adding that the opening of the West Island Line may be postponed to the first quarter of 2015.

The city’s sole railway operator said earlier that it is difficult to complete the South Island Line (East) and the Kwun Tong Line Extension on schedule in 2015.

The additional capital expenditure on the West Island Line and the South Island Line (East) will be borne by the company, said chief financial officer Stephen Law said.

The railway investment will be amortized through a period of 25 to 30 years in MTR’s accounts. That could mean an impact of less than 1 percent a year on profits and less than 1.5 percent a year on the balance sheet.

MTR announced earlier that the cost of a high-speed rail project linking Hong Kong and Guangzhou would rise from the original HK$65 billion to HK$71.52 billion, or 10 percent above the budget.

The management said on Monday that the government has paid part of the HK$4.59 billion of management fees for the high-speed rail project in line with the trust agreement. The railway operator, however, didn’t disclose the specific amount it received.

Meanwhile, observers expect the cost of the Sha Tin to Central Link project would go up several billion dollars as construction has fallen behind schedule by 11 months due to an archaeological survey on a site along the planned line.

Related articles:

MTR to work with govt on spiraling high-speed rail cost

MTR director Chew blamed for not alerting board on project delay

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