The government says it will ask for a nominal land premium in an agreement to transfer the assets of the Express Rail Link to the Kowloon-Canton Railway Corporation (KCRC). The MTR Corporation (MTRC) will then operate the new rail system through a service concession.
In return for the land, interests and rights, KCRC will pay a premium of HK$1,000, and an annual rent – equivalent to three per cent of the rateable value of the land – for 50 years.
KCRC, the historical company which ran the first railway in Hong Kong, merged with the MTRC in 2007. It has become an asset manager overseeing the concession, and the holder of the railway system, land and assets concerned. It granted a service concession to the MTRC to operate its multiple railway lines.
It said that, as KCRC is wholly owned by the government, the transfer of the rail’s assets do not affect the government’s ultimate ownership. It will reclaim its ownership at the end, or upon termination of, the service concession.
“While the Government will not recuperate the capital costs of the [Express Rail Link] ($86.42 billion) under the proposed land and asset holding arrangements, the Government will receive dividends from the KCRC from the operation of the [Express Rail Link] if there are profits arising from the latter,” it said in the document.
The government said that the MTRC should formally be appointed as the operator of the rail system by December this year, as the project is expected to be operational by the third quarter of next year.
It said the arrangement has “all along been in the public domain,” as such a plan had been proposed in October 2009 to the Legislative Council.
“As the general public is unlikely to be affected by the landholding arrangement and transfer of movable assets… public consultation is not required,” it said.
The land and facilities that the KCRC will receive, excluding the airspace above for future property development, include:
- an approximately 26 km long underground rail line and the associated railway systems and facilities;
- an emergency rescue station, stabling sidings and maintenance facilities at Shek Kong;
- eight ventilation buildings (including West Kowloon Plant Building) and one emergency access point along the rail line; and
- the West Kowloon Station, with the associated railway, transport, boundary control and ancillary facilities.
The overall completion rate of the rail system was 94.3 per cent as at the end of June this year.