CHINA: Passenger services on the Hong Kong section of the Guangzhou – Shenzhen – Hong Kong high speed line will begin on September 23, the Special Administrative Region government confirmed following the signing of two operating agreements on August 23.

‘High speed rail will open a new page in rail travel in Hong Kong and will impact positively on the city’s economic development by enhancing Hong Kong’s connectivity with the Mainland’, said Professor Frederick Ma, Chairman of MTR Corp which acted as project manager for construction of the 26 km route and has been awarded a 10-year operating concession.

‘Although there will inevitably be challenges in launching a new railway service, we are confident of providing a safe and efficient service and managing any teething issues that may arise’, he said.

Operating agreement

The SAR government and MTR Corp have signed two principal agreements for the operation of the Express Rail Link.

An Amendment Operating Agreement modifies an existing agreement between MTR Corp and the government, putting regulation of the high speed line on a similar basis to the existing network. It also provides procedures for setting fares, which cannot be adjusted without prior government consent.

A Supplemental Service Concession Agreement between MTR Corp and Kowloon–Canton Railway Corp is similar to that for the section of the existing network subject to a service concession. MTR Corp will make variable annual payments to KCRC based on a percentage of revenue from high speed services, while KCRC will pay MTR Corp a fixed annual fee totalling HK$7 965m over the 10-year concession period which is intended to allow MTR Corp to make a commercial rate of return after deducting its operating and asset management costs and the variable annual payment from its high speed rail revenue. There are arrangements to share any revenue excess or shortfall of more than 15% above or below forecasts.

‘Fair and reasonable’

‘The arrangements we have reached with the government and KCRC are fair and reasonable’, said MTR Corp CEO Lincoln Leong. ‘The concession is designed to generate a commercial return for MTR and we will share risks that arise, upside as well as downside risks, with KCRC in an appropriate manner.

The 102 km high speed line between Guangzhou Nan and Shenzhen Bei opened in December 2011. Construction of the Hong Kong extension of the route was approved in October 2009 when completion was planned for 2015, but tunnelling proved more difficult than anticipated.