The Government and MTR Corporation Limited (MTRCL) entered into the Project Agreement on the Penny's Bay Rail Link (PBRL) today (July 24).
The Project Agreement sets out how the PBRL project will be undertaken, and the respective obligations of the Government and the MTRCL in terms of the financing, design, construction and operation of the PBRL.
The project is estimated to cost $2 billion in money of the day prices. In order to ensure the project can achieve an acceptable commercial rate of return, the Government has agreed, as a measure of financial support, to waive its claim for $798 million (at present value) of dividends that would otherwise be payable by MTRCL to Government in the next few years.
In response to the concerns about the waiver of dividends, a Government spokesman said that the financial arrangement of the Project as set out in the Project Agreement is entirely lawful and appropriate.
A government spokesman said,"The HKSAR Government is a law-abiding government. We have sought advice from the Department of Justice and also from an outside Senior Counsel. Both have confirmed that the financial arrangement of the Project has sound legal basis."
Section 38(1)(a) of the Public Finance Ordinance empowers the Financial Secretary to waive any claims by or on behalf of the Government. The legal advice we have received has confirmed that this provision empowers the Government to waive claims to dividends to be declared by the MTRCL. Once such claims have been waived, the dividends will not be received and will not form part of general revenue.
"Dividend waiver is the most appropriate option of providing financial support to this project after considering other options," he said.
The PBRL is a principal gateway to Hong Kong Disneyland. It has a route length of approximately 3.5 kilometres, running from a new station at Yam O on the existing MTR Tung Chung Line, to Hong Kong Disneyland. The journey will take less than 4 minutes.
The spokesman said, " The PBRL will offer a new experience for its passengers. The rail and its station at the Penny's Bay will be uniquely designed to be commensurate with the standards of the Hong Kong Disneyland. A journey on the PBRL to Hong Kong Disneyland will be something which adults and kids alike look forward to, something which the community is proud of."
The signing of the Project Agreement will enable the construction of the PBRL to proceed immediately. This signals another key step forward in the implementation of the Hong Kong Disneyland Project, which is expected to strengthen Hong Kong's position as a major tourist destination in Asia and estimated to generate an economic benefit of $148 billion.
"The PBRL can generate more than 1 000 employment opportunities at the climax of its construction period. MTRCL is required under the terms of the Project Agreement to complete the PBRL in 2005 such that the commissioning of the PBRL will tie in with the opening of Hong Kong Disneyland," he added.
End/Wednesday, July 24, 2002