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The Executive Council today (December 10) approved in principle the draft East Rail Extensions Project Agreement to be executed between Government and the Kowloon-Canton Railway Corporation (KCRC) subject to any drafting changes which may be necessary before execution.

The draft Project Agreement sets out the respective rights and obligations of Government and the KCRC in carrying out the East Rail Extensions, namely the Ma On Shan to Tai Wai Rail Link (MOS Rail), Kowloon-Canton Railway Extension from Hung Hom to Tsim Sha Tsui (TST Extension) and Sheung Shui to Lok Ma Chau Spur Line (Spur Line) in terms of their financing, design, construction and operation.

A Government spokesman said: "The three East Rail extensions have been authorised by the Chief Executive in Council under section 11(4) of the Railways Ordinance. It is necessary for Government to enter into a Project Agreement with KCRC to set out how the projects are being undertaken.

"The Project Agreement is drafted on the basis of the West Rail Project Agreement executed in 1998 after endorsement by the Executive Council. The terms of the Project Agreement are also consistent with previous Government decisions and financial proposals approved by the Legislative Council Finance Committee. Amongst other things, the Project Agreement records the injection of Government equity of $8 billion into KCRC and the grants of property development rights at six sites, both of which were endorsed by the Executive Council in June 1999 and subsequently by the Finance Committee in May 2000," he added.

Amongst other things, the draft Project Agreement -

(a) provides for the injection of equity of $8 billion into the KCRC by Government;

(b) provides for reasonable endeavours on the part of Government to enable KCRC to undertake property developments at two sites along East Rail, namely, the sites above or adjacent to the Fo Tan Station and Ho Tung Lau, and at four sites along the MOS Rail, namely, the sites above or adjacent to the Tai Wai Station, Tai Wai Maintenance Centre, Wu Kai Sha Station and Che Kung Temple Station. The profits generated will contribute to the Corporation's debt repayment, thereby strengthening the Corporation's financial position in the early years of its new projects' operations;

(c) fixes the scope of works of the East Rail Extensions, which KCRC plans, designs and constructs with timely support from Government;

(d) obliges the KCRC to work in accordance with a Baseline Programme which is closely monitored and reviewed annually by both Government and KCRC to ensure that the three extensions will be completed by the respective Scheduled Operating Dates;

(e) covers land matters in relation to the projects; and

(f) obliges the KCRC to comply with all requirements in the environmental permits issued under the Environmental Impact Assessment (EIA) Ordinance (Cap. 499) and relevant environmental protection legislation.

The MOS Rail and TST Extension are now under construction and are expected to commence operation by end 2004. The construction of the Spur Line is scheduled for completion by mid-2007.

End/Tuesday, December 10, 2002

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