- Previous cost overruns of HK$16.5 billion submitted by the MTR Corp revised to slightly over HK$10 billion, according to government paper
- Project, plagued by allegations of shoddy work and reports of missing documents, suffered repeated delays and cost overruns
The final cost of Hong Kong's scandal-hit Sha Tin-Central rail link has been fixed at HK$90.7 billion (US$11.6 billion), down from an estimated HK$99.1 billion, after the government revised budget overruns and left the MTR Corporation to pick up the tab for the project's partial opening and reinforcement work.
But it remains the city's most expensive railway project, exceeding the HK$84.4 billion for the high-speed rail link.
In a paper submitted to the legislature on Friday, the Transport and Housing Bureau said the government had revised previous cost overruns of HK$16.5 billion (US$2.1 billion) submitted by the MTR Corp to slightly over HK$10 billion.
In December 2017, the embattled rail giant said the 17km (11-mile) line was -expected to come in at HK$16.5 billion above its original budget, meaning the cost could reach HK$97.1 billion.
The project, plagued by allegations of shoddy work and reports of missing documents at the Hung Hom station since mid 2018, suffered repeated delays and cost overruns.
Last July, the government said the total cost would balloon to at least HK$99.1 billion because of an extra HK$2 billion needed for the line's partial opening, as well as for reinforcement work at Hung Hom station.
The MTR Corp provisionally paid contractors the HK$2 billion, expecting a settlement with the government. However, the paper said the rail giant was responsible for the extra cost resulting from remedial work.
"The MTR Corp should continue to manage payments to contractors, etc, in accordance with the terms of the contracts. The government will rigorously monitor the process," a bureau spokesman later said.
The government is the MTR Corp's biggest shareholder, with an interest of around 75 per cent.
Lawmaker Michael Tien Puk-sun, former chairman of the Kowloon-Canton Railway Corporation, said the government reined in the overruns to HK$10 billion after a compromise with the MTR Corp.
The company agreed to cut the figure to HK$12.1 billion, and then the government further reduced the amount, including dismissing HK$1.37 billion of additional project management costs the MTR was entitled to.
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But Tien accused the government of playing politics to resolve a contractual dispute, saying it was a dangerous practice that put the interests of MTR shareholders at risk.
"The government should respect contractual obligations. If it disputes this additional management cost, it should still bear this cost according to the contract and then sue the MTR for damages," he said.
"But now the government allows politics to override contractual obligations and forces the MTR to bear the management cost, which is not fair to the MTR's small shareholders."
The bureau said it expected to consult the Legislative Council's public works subcommittee about the final HK$10 billion in the first half of the year and later seek funding approval from the Finance Committee.
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The first part of the rail link, known as Tuen Ma line phase 1 connecting Wu Kai Sha to Kai Tak through Tai Wai, Hin Keng and Diamond Hill, opened to traffic on February 14.
The Tai Wai-Hung Hom section was initially expected to open in the middle of 2019, after an earlier target of December 2018 was pushed back by construction delays. But it was further delayed to late 2021 by the reinforcement work at Hung Hom station.
The opening of the cross-harbour section between Hung Hom and Admiralty was earlier delayed to the first quarter of 2022 from the already revised target of the fourth quarter of 2021.
The MTR Corp blamed the latest postponement on vandalism of another line by radical protesters amid the anti-government demonstrations which gripped the city since last June.
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