Saturday, 5 December 2015

The MTR Needs Money -- Again

An illustration of what the West Kowloon-Guangzhou station will look like
Earlier this week Hong Kong people found out that the MTR Corporation is HK$19 billion over budget in building the 26km high-speed link from West Kowloon to Guangzhou. It is also three years behind schedule.

And who's going to pay for this massive shortfall?

The Hong Kong government has pledged that we, the taxpayers will shore up the HK$19.6 billion, and the same amount will be eventually recouped through a special dividend the MTR will pay out.

The company pledges to pay HK$25.76 billion in dividends at the rate of HK$4.40 per share -- four times last year's payout -- in two stages.

What the site looks like now, three years behind schedule
And because the Hong Kong government owns 76 percent of MTR shares, it will get the HK$19.6 billion back, and the other shareholders will get HK$6.2 billion. Not bad if you're an MTR shareholder.

But what about the rest of us? Why should we be bailing out a publicly-listed company? It should be lending money from the banks instead like any other company. If we do shell out the money, do we get free rides on the train? Highly doubt it.

If the Legislative Council does not approve this extra funding request by the government, then the project will be further delayed. But that's fine -- do we really need this high-speed train when we can get to Guangzhou relatively comfortably in three hours currently?

Secretary for Transport and Housing Anthony Cheung Bing-leung apologized yesterday for the delay and the cost of the overruns, while others called for his resignation. One should check to see if he owns any MTR shares...

Why should taxpayers bail out the MTR for cost overruns?
In the meantime, there is also the contentious issue of having mainland immigration officers stationed in Hong Kong in order to speed up the process.

The Civic Party is proposing that these mainland immigration officers could check passengers while on the train, however Secretary for Justice Rimsky Yuen Kwok-keung hinted last month that the officers would be based in Hong Kong, after his chat with officials in Beijing.

"If Hong Kong people allow mainland officers to be stationed in Hong Kong, it will set a bad and irrevocable precedent to the rule of law in Hong Kong," said party leader Alan Leong Kah-kit.

The Hong Kong government is probably going to lose this round. Public sentiment for this high-speed rail link and the MTR has plunged considerably. It will be eventually built, and mainland immigration officers will probably be stationed in the West Kowloon station, but resentment for the MTR and the government will continue to simmer...

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