Lawmaker Michael Tien said the new arrangement to transfer the assets of the Guangzhou-Shenzhen-Hong Kong Express Rail Link to the Kowloon-Canton Railway Corporation (KCRC) may be intended to avoid the Legislative Council’s oversight.

In return for the land, interests and rights of the rail system, KCRC will pay the government 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. The MTR Corporation (MTRC) will then operate the new rail system through a service concession.

Tien, the former chairman of the KCRC, said the arrangement offers two benefits to the companies. He said, if the Express Rail Link runs at a loss, they do not have to ask the legislature to approve subsidies; the legislature will also have no oversight over any conditions that KCRC negotiates with the MTRC.

Michael Tien. File photo: LegCo.

In 2007, KCRC – the historical company which ran the first railway in Hong Kong – became an asset manager overseeing the service concession agreement to the MTRC to operate its multiple railway lines. The government-owned company is also the holder of the railway system, land and related assets.

Tien said the ticket price of the Express Rail Link will be decided by the Hong Kong and mainland governments together – the MTRC will not have the freedom to decide the pricing.

“No one knows how much it will be, but everybody speculates that it will run at a loss,” he said on a Commercial Radio programme. “If the government is directly involved, it will have to go to the Legislative Council for subsidies every year.”

The Express Rail Link terminus. File photo: In-Media.

He said that the KCRC receives around HK$2 billion every year from the MTRC because of the current service concession agreement.

“[The amount] should be enough to cover the Express Rail Link’s loss. If the Express Rail Link is to run without a loss, the ticket price may have to be up to HK$1,000 – it is impossible,” he said.

Tien said since the KCRC will become asset manager of the Express Rail Link, the KCRC and MTRC will not need to go to the legislature when discussing conditions.

“They can answer [to the legislature] if they like; they can choose not to if they don’t like,” he said.

Kris Cheng

Kris Cheng is a Hong Kong journalist with an interest in local politics. His work has been featured in Washington Post, Public Radio International, Hong Kong Economic Times and others. He has a BSSc in Sociology from the Chinese University of Hong Kong. Kris is HKFP's Editorial Director.