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Following is a question by the Hon Albert Ho and a written reply by the Secretary for Financial Services and the Treasury, Mr Frederick Ma, in the Legislative Council today (November 29):
Question:
Regarding the development and financial position of the Kowloon-Canton Railway Corporation (KCRC), will the Government inform this Council whether it knows:
(a) the number and names of properties along the railway routes developed by KCRC, since its corporatisation in the 80's, in partnership with the private sector;
(b) the KCRC's net profits from the sale of properties along East Rail (ER), Light Rail Transit (LRT) and West Rail (WR) (please provide the relevant details using the table at Annex 1);
(c) the respective amounts of net profits made by KCRC from property management, leasing of shops, offices and residential units, commercial businesses in stations and other businesses in each of the past three years (please provide the relevant details using the table at Annex 2);
(d) the capital costs for constructing LRT (including all the extensions), and whether the profits made by KCRC from developing properties along LRT are adequate for offsetting such costs; and
(e) LRT's income from train fares, as well as expenditure on interest on capital and loans and depreciation charges in each of the past three years, and whether LRT was still operating at a loss if such expenditure was not deducted from the income in each year of the same period?
Reply:
Madam President,
The information provided by the Kowloon-Canton Railway Corporation (KCRC) is set out below:
(a) and (b) See Annex 3.
(c) See Annex 4.
(d) Between 1988 when LRT came into operation and 2005, the capital cost for LRT (including the initial system, all the extensions, system upgrading and facilities improvement works) totalled about HK$5.2 billion.
According to the information provided at Annex 3, the profit generated from sale of properties along LRT was around HK$2 billion, which is not adequate to offset LRT's capital cost of around HK$5.2 billion.
(e) The capital expenditure of LRT was about HK$5.2 billion. Based on KCRC's existing cost of capital of 7.1%, the annual cost of capital is about HK$369 million. It should be noted that this amount is not an actual payment as the capital expenditure incurred is met by the internal funds of KCRC.
KCRC has not secured any borrowing for LRT in the past three years.
The depreciation charges of LRT in the past three years are as follows:
Year Depreciation charges of LRT
(HK$ million)
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2003 95
2004 123
2005 154
The fare revenues of LRT in the past three years are as follows:
Year Fare revenue of LRT
(HK$ million)
---- -------------------
2003 375
2004 404
2005 392
If the depreciation charges were not deducted from the income, LRT would have basically been breaking even in the past three years.
Ends/Wednesday, November 29, 2006
Issued at HKT 15:17
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