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KCRC wins Sha Tin link

01 Aug 2002

ON JUNE 25 Hong Kong's Acting Secretary for Transport Paul Tang Kwok-wai announced a feasibility study into the merger of MTR Corp and Kowloon - Canton Railway Corp. A merged company would have net assets worth HK$148bn, and analysts estimate that savings worth up to HK$100m a year would be possible thanks to a single management and lower administration costs. The study, expected to take several months, will look in detail at competition issues and fares structures.

On the same day the Executive Council authorised the award of a HK$26bn contract to KCRC to build and operate the 17·1 km line with 10 stations between Sha Tin in the Eastern New Territories and Central. Due for completion in late 2008, the line will include a fourth cross-harbour rail crossing. Strategic advice and technical co-ordination for the bid was provided by WS Atkins. KCRC had faced strong competition for the Sha Tin line from MTRC, whose bid was priced lower at HK$23bn but included a request for significant property development rights in three areas.

The announcements did nothing for MTRC's share price, which has been under pressure for some time. When the government floated a 20% stake in October 2000, the shares were issued at HK$9·38. After peaking at HK$14·80 in 2001, they were valued on June 26 at HK$10·15.