Hong Kong’s MTR Corp has won its first metro rail construction project in China after agreeing to sign a 30-year concession to build and operate the US$731M second stage of Shenzhen’s Line 4 in southern China.
Most of the 16.5km double-track railway will be built underground. It will run from Huanggang, a western boundary crossing between Hong Kong and Shenzhen, to Longhua in the north-western corner of Shenzhen.
Under the terms signed in mid-January, MTR Corp agreed in principle with the Shenzhen municipal government to negotiate an operating agreement. This deal, which has to be approved by China’s National Development and Reform Commissions, will allow the MTR Corp to set up a project company in China to build and operate the metro line.
Precise financial details of the deal have still to be worked out, but it includes rights to develop property worth US$1.3bn along the route of the line.
The franchise includes the operation of the first phase of Line 4 which is being built by the Shenzhen Metro Company for completion by the end of 2008.
Construction of the second stage is expected to start in 2006 for completion in seven years.
The rail company’s chief executive CK Chow said: “The rail-plus-property development has been a highly successful business model for Hong Kong’s MTR by a funds for the construction of new railway lines so we apply this to Shenzhen, which could generate new revenue and profit streams.”
MTR Corp has been seeking opportunities outside Hong Kong to offset falling passenger demand and a hold on future rail projects. In Asia, the MTR Corp is half-way through a six-year assignment with the Kaohsiung Rapid Transit Corporation to advise on the design, construction, commissioning and testing of the southern Taiwanese city’s metro. It is also working with Alstom (Thailand) on operations and maintenance and training issues on the Bangkok Metro.
