The Hong Kong government and the MTR Corporation have just come up with a shorter agreement regarding the operation of the cross-border high-speed rail link. This agreement would enable flexibility on both sides in order to maximize benefits.
According to South China Morning Post, the undersecretary for transport and housing Dr. Raymond So Wai-man explained the advantages mentioned above of striking the aforementioned agreement. He also pointed out that the deal is expected to be shortened to 15 years instead of the initial 50-year proposal.
The shortened agreement encompasses the rail giant over the operation of the HK$84.4 billion (US$10.7 billion) Guangzhou-Shenzhen-Hong Kong Express Rail Link. The latter has a month left before its launching.
With the opening date getting close, many are wondering how the government will strike an acceptable deal with the MTR Corporation. It is worth noting that the company has been the center of attention lately following a series of construction scandals and management crisis issues. These controversies, however, eventually led to several high-profile departures, one of which is the early retirement of the company's CEO Lincoln Leong Kwok-kuen.
Yahoo! reports that the potential profitability of the line has also been stained. This is due to the many delays and budget overruns, all of which took place in the past few years.
"I understand that the MTR Corp doesn't want to take longer-term responsibility for the replacement of the high-speed rail assets such as trains and other facilities. The cost of which will be huge and will affect its profitability," former rail boss and lawmaker Michael Tien Puk-sun said, quoting insider sources.
One reason why the MTR demanded a shortened agreement is to avoid bearing the asset replacement cost. Tien iterated, though, that the rail firm will still be responsible for covering maintenance and repair costs, as well as the payroll bill.
