LegCo Paper No. CB(1) 585/96-97

(These minutes have been seen by the Administration)
Ref : CB1/PS/8/95/1

LegCo Panel on Transport
Subcommittee on Western Corridor Railway Project

Minutes of the Meeting on
Friday, 21 June 1996 at 8:30 a.m.
in the Chamber of the Legislative Council Building

Members present :

    Hon Mrs Selina CHOW (Convenor)
    Hon Mrs Miriam LAU Kin-yee, OBE, JP
    Hon Albert CHAN Wai-yip
    Hon LEE Wing-tat
    Hon CHAN Wing-chan
    Hon CHEUNG Hon-chung
    Hon Albert HO Chun-yan
    Dr Hon LAW Cheung-kwok
    Hon LEE Kai-ming
    Hon NGAN Kam-chuen
    Hon SIN Chung-kai
    Hon Lawrence YUM Sin-ling

Members attending:

    Hon Michael HO Mun-ka
    Hon Eric LI Ka-cheung, OBE, JP
    Dr Hon Samuel WONG Ping-wai, MBE, FEng, JP
    Hon CHAN Kam-lam
    Hon CHAN Yuen-han
    Hon IP Kwok-him
    Hon Ambrose LAU Hon-chuen, JP

Members absent :

    Hon Edward S T HO, OBE, JP
    Hon Zachary WONG Wai-yin
    Hon TSANG Kin-shing

Public officers attending :

Mr Paul LEUNG, JP
Acting Secretary for Transport
Mrs Jenny Wallis
Principal Assistant Secretary for Transport
Mr Esmond LEE
Acting Principal Assistant Secretary for Planning, Environment and Lands (Lands)
Mr L N Parker
Government Engineer/Railway Development
Highways Department
Mr Raymond KONG
Acting Chief Engineer/Railway, Highways Department
Mr George LAI
Acting Assistant Commissioner/Technical Services & Planning, Transport Department

Attendance by invitation :

From Kowloon-Canton Railway Corporation
Mr Kevin Hyde
Chairman/Chief Executive
Mr Samuel LAI
Director, East Rail
Mr Ian McPherson
Director, West Rail
Mr Jonathan YU
Director, Light Rail

Clerk in attendance:

    Mrs Vivian KAM

Staff in attendance :

Mr Billy TAM
Senior Assistant Secretary (1)4

I Election of Chairman

The Convenor, Hon Mrs Selina CHOW, declared the meeting open and invited nominations for the chairmanship of the Subcommittee. Hon Mrs Miriam LAU Kin-yee was elected Chairman of the Subcommittee.

2. Hon Mrs Miriam LAU took over the chair at that juncture and consulted members on the need to elect a Deputy Chairman. Members agreed that a Deputy Chairman for the Subcommittee was not necessary.

II Terms of Reference

3. Members approved the terms of reference of the Subcommittee as follows: "To monitor progress of the Western Corridor Railway project and to make appropriate recommendations to the Administration."

III Internal Discussion and Meeting with the Administration

4. Members expressed concern about the late provision of information papers by the Administration. Mr Paul LEUNG explained that this was on account of the tight schedule for preparing the papers due to the intervening public holidays.

Target date for completion of project

5. Mr LEUNG advised that the target date for completion of the Western Corridor Railway (WCR) project was 2001. However, as a significant number of issues were involved including engineering alignment, land resumption, legislative programme and financial arrangements, the timetable was tight and would require constant review. A recent review by the Administration on the land resumption requirements and the work plan of the land resumption exercise suggested that the target completion date might be too optimistic. Mr LEUNG affirmed that he would monitor the situation and report regularly to the Subcommittee.

6. A member remarked that the Kowloon-Canton Railway Corporation (KCRC) was inexperienced in building railways, and enquired about the means through which the Administration could monitor KCRC’s planning and timely completion of the project. Mr LEUNG responded that when KCRC was invited to submit a proposal on the project, the Administration had considered the completion date in 2001 feasible based on the assessment at that time. He emphasized that the land resumption work was to be taken up by the Administration and not by KCRC. As the Administration envisaged that the land resumption exercise was a massive one, the Administration, and not KCRC, was of the view that the target date might be beyond 2001. On the experience in railway construction, Mr LEUNG said that KCRC would be assisted by consultants experienced in this field and who would be engaged through fair and open competition.

7. In response to the Chairman, Mr LEUNG said that the Administration had reviewed the land requirement and the resources needed for the resumption of land which included over 1000 graveyard sites. Mrs Jenny Wallis added that depending on the availability of manpower resources, the time required for land resumption might be shortened. On the workload of the land resumption exercise, Mr Esmond LEE estimated that the resumption/clearance of 1.3 million square metres of private land and 2.7 million square metres of Government land was equivalent to one year’s land resumption/clearance workload effort by the Lands Department, on the basis that 22% of staff in the Lands Department were involved in land resumption work. According to a preliminary estimate prepared by the Lands Department, the exercise would take about five years to complete. As regards the processing of objections and appeals, Mr Raymond KONG said that statutory time limits were applicable and progress of the exercise might be difficult to control. A member considered that additional resources would have to be provided to cope with the increased workload and to shorten the time required; she also enquired about the time when the Administration found the target unrealistic. Mr LEUNG agreed that the Administration should try to secure additional resources. He added that land for the WCR project would be handed over in batches, and that resumption of essential lots would be accorded top priority.

8. Mr Kevin Hyde of KCRC added that the KCRC was invited to submit a proposal to complete the WCR by 2001. KCRC’s planning had therefore been based on this direction. If the date were to be changed, KCRC would need to review its timetable. On KCRC’s competence in taking up the project, Mr Hyde pointed out that similar to the situation with the Mass Transit Railway, there was no local experience in building a railway prior to the construction of the Mass Transit Railway. KCRC had been involved in the construction of the Light Rail Transit and the electrification of KCRC. As the WCR project was still pending, it would not be prudent for KCRC to hire a large team of staff for the project. Upon approval of the project, the KCRC would effect a transition from a consultant-based to a permanent-employment-based team.

Government’s stand

9. In response to members on the time taken for arriving at a decision on the project, Mr LEUNG explained that studies completed so far covered only a 5% design stage of the project. More detailed technical studies would be required before the Administration could formulate its views. Mr LEUNG further clarified that the timetable for the various stages of the project submitted by KCRC represented only KCRC’s views. The Administration would need to have regard to the consultants’ reports before a timetable could be worked out. He undertook to revert to the Subcommittee once the Administration had completed its assessment.

10. A member noted that there was already slippage in the proposed legal enactment programme. Mr LEUNG agreed with this fact but advised that relevant bills would be introduced into LegCo by the end of 1996.

Project Steering Committee

11. In response to members on the role and composition of the Project Steering Committee, Mr LEUNG advised that the Committee assumed a co-ordinating role and was chaired by himself with members from relevant policy branches and departments. In addition, a Working Group under the chairmanship of Mr L N Parker had also been formed. Mr Parker supplemented that the Working Group was responsible for regional work such as engineering land sites and interfaces with on-going projects. Consultation had been made with District Boards and the Municipal Councils and there were also ongoing negotiations with KCRC to effect necessary changes to the proposals; over 250 meetings had been held over the last six months. The Working Group would report progress to the Project Steering Committee.

The WCR project

12. A member cast doubt on the economic viability of spending $18 billion on cross-border freight transport by railway when only 240,000 containers, representing about 5-10% of the volume handled by container terminals, were to be handled annually. Members asked for an assessment on the feasibility of completing the project by phases such as by distances and types of services. In response, Mr Ian McPherson of the KCRC explained that over 90 options had been considered in the Railway Development Study (RDS) before the Administration asked KCRC to provide a proposal. KCRC had considered some 10 options in order to shorten the route and to reduce costs, and the study concluded that the option chosen in the RDS was the best choice. Mr L N Parker added that this option was also the most cost effective. At the request of members, Mr LEUNG agreed to provide a summary of the options considered in the RDS.

13. To assist members in understanding the background of the RDS, the Chairman instructed that the Finance Committee paper in 1995 on the application of $45 million for Phase II of the Railway Development Study be circulated for members’ information.

(Post-meeting note: The relevant document was circulated to members vide LegCo Paper No. CB(1) 1677/95-96.)

14. In response to a member on the 190 interface projects, Mr Parker advised that these were existing or planned infrastructure projects along the alignment of the railway. He emphasized that the identification of these interface projects would allow the KCRC to incorporate these in their proposal and minimize delay.

The Full Proposal

15. Members asked if the Administration had been involved in studies undertaken by KCRC. They enquired about the role of the Government officials on the KCRC Board in the WCR project and their part in approving the consultants’ fees. They were also doubtful of the need for the Administration to hire independent consultants to study the KCRC’s full proposals. In reply, Mr LEUNG said that KCRC should have autonomy in deploying its resources for undertaking studies. While the Board was kept informed of the broad direction of activities, it would not be possible for the Board directors to know about every detail of the proposals. Mr Hyde added that the amount of $434 million spent so far on feasibility studies was for on-going work required to meet the 2001 completion date target, and KCRC had been working closely with the Government in this connection. Mr Parker agreed that the sum was necessary to enable KCRC to come up with a cost effective proposal. On the need for the Administration to engage consultants to study KCRC’s proposal, Mr LEUNG explained that KCRC’s proposal might have been drawn up from certain angles and an independent assessment was necessary in order to get an overall view.

Relationship between KCRC and the Administration

16. Some members were dissatisfied with the duplication of efforts and asked for clarification of the relationship between the Government and KCRC in the WCR project. Mr LEUNG undertook to provide a paper, outlining the past, present and future relationship of the Administration with the KCRC on the project. As to the reason for the Administration not having taken up the WCR study itself, Mr LEUNG explained that costs was a prime consideration. Furthermore, the Administration intended to ask KCRC to take up the project on account of its expertise and professional knowledge in this field. Furthermore, invitation of tenders would prolong the process.

Validity of assumptions

17. Some members asked if KCRC and the Administration were aware that part of the alignment of the WCR overlapped with those of the Light Rail Transit and Route 3, and that this would have impact on the passenger demand for WCR services. Similarly, the future development of ports in neighbouring areas in China did not appear to have been considered in the freight demand study. Mr LEUNG confirmed that members’ views would be considered in future technical studies to be undertaken by KCRC as well as the independent assessment of the KCRC proposal by Government consultants.

18. Some members commented that the negative impact on finance-related matters in the full proposal had been derived on the basis of very optimistic assumptions. An example was that only a 6-month delay had been considered in the study of the negative impact on cost. Members suggested that more worst situation scenarios should be considered. Members also challenged the validity of the assumption that WCR fares would be competitive as WCR provided direct service to urban destinations. They considered that other public transport operators would also provide direct services to urban areas to maintain competitiveness and they were worried that such incorrect assumptions might affect significantly the revenue and viability of the WCR.

Fares

19. In response to members on the future WCR fares, Mr Hyde said that only a fare model was available at that point in time and that the fare structure would be worked out near the time when WCR became operational.

Consultants fees

20. As regards members’ concerns on the tendering procedures, the number of bidders, and the choice of International Bechtel Incorporated as a chief technical adviser which at the same time was also responsible for the massive New Airport Project, Mr Hyde informed that there were altogether six bidders and tenders were evaluated using normal tendering procedures resembling Government practices. The appointment of Bechtel was independent of its being involved in the New Airport Project. Bechtel assumed the role of a project manager during the detailed feasibility study stage and was responsible to the KCRC Board. After completion of the study, it would report to senior KCRC directors who headed the WCR project. Mr Hyde also clarified that Bechtel was one of the chief technical advisers.

21. On members’ request for information on the allocation of the $434 million consultants’ fees already spent, Mr Hyde advised that the Corporation had to consult the contracting parties for consent prior to disclosure of the information. Members were of the view that in order to enhance transparency of the WCR project, contract sums should be disclosed after contracts had been awarded. They further suggested that the terms of the contracts be amended to allow for such disclosure. As a related issue, Mr Hyde undertook to provide a list of the $139 million consultants’ fees spent between January to April 1996 in preparing for the technical studies.

22. A member also requested the Administration to advise the number and details of feasibility studies undertaken by KCRC and submitted to the Administration since 1986 on the provision of connecting transport services from Tuen Mun and Yuen Long to the urban areas.

Contingencies and Reserves

23. A member considered it inappropriate to calculate contingencies and reserves using the total cost of $75 billion as a base instead of the engineering costs. She was of the view that the percentage was unreasonably high.

Withholding of award of contracts

24. On the Transport Panel’s request for KCRC to temporarily withhold awarding contracts for technical studies in the sum of about $750 million, Mr Hyde said that the request would be considered in the light of the Administration’s advice that 2001 was now not the target date for completion. As regards members’ request for the full proposal submitted by KCRC, Mr LEUNG said that he would check if the proposal contained sensitive information and would follow-up with the clerk to the Subcommittee.

Way forward

25. Members agreed that there would be regular weekly meetings to examine subjects as presented in KCRC’s proposal as follows:

  1. Transportation Planning;
  2. Detailed Engineering Report;
  3. Financial Analysis;
  4. Legal Empowerment;
  5. Land Requirements; and
  6. Implementation Plan

26. There being no further business, the meeting ended at 10:50 a.m.

Legislative Council Secretariat
30 December 1996

Last Updated on 21 Aug, 1998