Hong Kong has cut the cost of its new Northern Metropolis rail link by 28 per cent to HK$86.2 billion (US$11 billion), after the government approved the funding for the project’s second phase, ahead of a planned launch by 2034.
The Transport and Logistics Bureau and the MTR Corporation signed a project agreement on Tuesday covering the Northern Link, marking the start of construction for both its main and spur lines.
The signing followed the green light from the Executive Council, the government’s key decision-making body, for the financial arrangements for part two of the project.
Secretary for Transport and Logistics Mable Chan said the government and the railway operator had adopted a series of initiatives with “major decisive breakthroughs” to reduce costs, expedite construction and boost the speed and efficiency of railway development.
These initiatives included introducing new Hong Kong Railway Standards to allow wider use of innovative technologies, materials and equipment, as well as establishing a dedicated Railway Checking Unit that reduced building-plan approval times by up to 50 per cent.
Chan said combining the main line and spur line into a single project generated synergies that lowered costs and brought forward the spur line’s completion by two years. As a result, both sections can now open together by 2034 or earlier.
“Through the above breakthroughs, coupled with the cost-saving benefits brought about by the shortened construction period, the overall construction cost of the whole Northern Link project has been reduced by 28 per cent as compared with the original estimate,” she said.
The government said an independent consultant reviewed the MTR Corp’s financial estimates for the second phase and verified a construction cost of about HK$54.8 billion. Combined with the estimated capital cost of HK$31.4 billion for the first phase, the entire project is expected to cost HK$86.2 billion.
Chan described the new link as a strategic railway project under the city’s inaugural five-year plan, which aligned with strategies set out in the national blueprint.
“Offering both local commuting functions within Hong Kong and cross-boundary railway services, the project will open up new transport corridors for both local and cross-border travel upon full commissioning,” she said.
Under the approved financing arrangement, the MTR Corp will receive development rights for eight sites in Ngau Tam Mei, San Tin, Kwu Tung North and the proposed Au Tau New Development Area under the rail-plus-property model.
The 10.7km main line will feature five stations, including interchanges with the Tuen Ma and East Rail lines at Kam Sheung Road and Kwu Tung, respectively.
Peak-period travel times between the two interchange stations will plunge from about an hour to 12 minutes.
The 6km spur line will connect San Tin with the newly launched Huanggang Port via Chau Tau and the loop, with a journey time of around 11 minutes.
Tuesday’s approval completes the two-part financing arrangement announced in July last year, when the government adopted a phased approach to allow the Northern Link project to proceed immediately while detailed planning, design and statutory procedures for the spur line continued in parallel.
The MTR Corp noted that an integrated planning and delivery approach had brought forward the spur line’s completion to 2034 or earlier, alongside the main line.
“The link, combining parts one and two, is one of the company’s biggest projects. We will explore various financing options, including issuing bonds,” a spokesman for the rail operator said.
Jeny Yeung Mei-chun, CEO of the MTR Corp, said the railway giant would take forward the associated land development in an orderly manner, planning and building communities to back the Northern Metropolis megaproject, including public open spaces, community facilities and public transport interchanges.
“Proceeds generated through land development will be used directly for railway construction and funding long-term maintenance and asset renewal, creating a sustainable business model that enables railway and community development to progress hand in hand,” she said.
In a stock exchange filing, the company said it expected to incur second-phase costs over 10 years, with projected capital expenditure of HK$1.1 billion next year, HK$2.9 billion in 2028 and HK$5.9 billion in 2029.
“On the basis of the company’s significant current cash resources, its proven access to a highly diversified range of capital markets, and that the expenditure is expected to be incurred over a 10-year period, it is considered that this expenditure can be accommodated within the company’s funding plans,” it said.
Former lawmaker Michael Tien Puk-sun, who previously chaired the Kowloon-Canton Railway Corporation, said the new railway standards – which optimised and streamlined the existing framework with elements closely aligned with national standards – would attract more bidders to the massive project.
The standards are based on the city’s existing railway guidelines, relevant standards from mainland China, and international benchmarks such as those set by European Standards and the Institute of Electrical and Electronics Engineers, with adaptations made to suit local conditions.
“Under standardised contract terms, many workflows such as plan approvals and drawing revisions have been simplified, so far more competitors will be able to step in as subcontractors,” Tien said, adding that opening the project to more competitors and tenders would weed out less competitive subcontractors and in turn ensure better quality and standards.
Jeff Yiu Ming, a lawmaker representing New Territories North, also welcomed the latest development, but urged the government to fast-track the Northern Link’s launch to ease congestion on the other two rail lines.
“As it stands, both the East Rail and Tuen Ma lines are under capacity strain – they are both feeling the pressure,” Yiu said. “If they can be connected as soon as possible, it would address that congestion and significantly ease the transit pressure we face.” -- SOUTH CHINA MORNING POST
