LegCo Paper No. CB(1) 590/96-97

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

LegCo Panel on Transport
Subcommittee on Western Corridor Railway

Minutes of the Meeting
on Friday, 26 July 1996 at 8:30 a.m.
in the Chamber of the Legislative Council Building

Members present :

    Hon Mrs Miriam LAU Kin-yee, OBE, JP (Chairman)
    Hon Albert CHAN Wai-yip
    Hon Zachary WONG Wai-yin
    Hon CHAN Wing-chan
    Hon Albert HO Chun-yan
    Dr Hon LAW Cheung-kwok
    Hon LEE Kai-ming
    Hon TSANG Kin-shing
    Hon Lawrence YUM Sin-ling

Members attending:

    Hon Eric LI Ka-cheung, OBE, JP
    Dr Hon Samuel WONG Ping-wai, MBE, FEng, JP
    Hon CHAN Kam-lam

Members absent :

    Hon Mrs Selina CHOW LIANG, OBE, JP
    Hon Edward S T HO, OBE, JP
    Hon LEE Wing-tat
    Hon CHEUNG Hon-chung
    Hon NGAN Kam-chuen
    Hon SIN Chung-kai

Public officers attending :

Mr Gordon SIU, JP
Secretary for Transport
>Mr Paul LEUNG, JP
, Deputy Secretary for Transport
Mrs Jenny Wallis
Principal Assistant Secretary for Transport
Mr Trevor Keen
Principal Assistant Secretary for Planning, Lands and Works (Lands)
Mr John Allen
Deputy Crown Solicitor(Commercial)
Legal Department
Mr C K MAK
Acting Government Engineer/Railway Development, Highways Department
Mr George LAI
Chief Engineer/Territory Transport Planning
Transport Department

Attendance by invitation :

From Kowloon-Canton Railway Corporation
Mr Kevin Hyde
Chairman
Mr Ian McPherson
Director, West Rail

From HSBC Investment Bank Asia Limited
Mr Conrad S L MA
Associate Director, Project Finance

From MVA Asia (Transportation, Planning and Management Consultant)
Mr Martin Read
Regional Director

From Pacific Bechtel Corporation
Mr Malcolm Snody
Deputy Project Manager, Engineer & Construction

Clerk in attendance:

    Mrs Vivian KAM

Staff in attendance :

Mr Jimmy MA
Legal Adviser
Mr Billy TAM
Senior Assistant Secretary (1)4

I Briefing on Implementation Plan

At the invitation of the Chairman, Mr Ian McPherson of the Kowloon-Canton Railway Corporation (KCRC) briefed members on the implementation plan of the Western Corridor Railway (WCR) project with the aid of slides.

(Post-meeting note: The presentation materials were circulated to absent members vide LegCo Paper No. CB(1) 1922/95-96.)

2. On the Modified Technical Studies Programme, Mr McPherson said that this included civil packages, environmental impact assessment, safety and reliability studies, and tunnel ventilation. The programme, costing $230 million and representing about a third of the work required in the original technical studies programme, would provide the necessary details for defining the land requirements for the WCR project. He emphasised that the technical studies , as well as the legislation to provide for land resumption, were critical for moving forward a project that would meet the transportation needs of the next century.

II Discussion on Implementation Plan

Monitoring body

3. In response to a member on the lack of overall planning by the Administration and of an effective co-ordination mechanism between the Administration and KCRC, Mr Gordon SIU advised that WCR was a major project involving a large number of departments. In addition to the many committees and working groups already set up under the co-ordination of the Transport Branch, the Administration had plans to set up a high level steering committee to oversee the project, as was the case with other major projects, and to report directly to the Chief Secretary. He confirmed that preparation work was in progress.

Land resumption

3. A member referred to the land resumption programme and pointed out that it was over-optimistic and unrealistic to expect objections to land resumption to be handled within one year. Mr Trevor Keen acknowledged that there might be a large number of objection cases but advised that resolving these within one year would not be unreasonable. The Administration would aim to draft legislation which would avoid challenges in court. On the manpower requirements for the land resumption exercise, Mr Keen said that a planning team had been set up in the Lands Department to embark on such duties as identifying and negotiating with objectors. The Administration would ensure that resources would be available to handle the jobs. Mr McPherson added that the timetable presented in the full proposal did not represent the implementation programme since it was now known that the resumption of land would take more time.

4. A member enquired if the Administration had started locating the whereabouts of owners of land lots which would likely be resumed. Mr Keen advised that the Administration was in the process of preparing for legislation for objections and resumptions and verifying a list of land lots, but no contact with landlords had been initiated. As the next step, the Administration would identify owners and put in place applications for development. On whether land resumption work would be contracted out, Mr Keen advised that the Administration was actively considering such a proposal with the exception of statutory functions which had to be discharged by the Administration.

Interface with other projects

5. On the 200 projects on which the proposed WCR alignment would have impact, Mr McPherson advised that most were road and drainage projects undertaken by Government and utility companies for laying cables. Mr Malcolm Snody of Pacific Bechtel Corporation supplemented that the projects had been listed in a chapter in the full KCRC proposal.

Legal enactment

6. A member asked how the project agreement between the Government and KCRC could be drafted when the details of the project and approval from the Joint Liaison Group (JLG) were not yet available. Mr SIU responded that the Administration had a broad concept on the future direction before commencement of the project and related legal procedures. He confirmed that JLG approval would have to be sought since works on the project would start in 1998 after the changeover of sovereignty.

Use of local expertise

7. Members expressed concern that the project management had been undertaken by overseas consultants and not local personnel such as those from the new airport projects and who possessed the expertise gained through the technology transfer provisions incorporated in contracts concerned. Mr SIU said that while permanent staff would be recruited for long term projects, this was deemed inappropriate for short-term projects as the laying off of employees would be involved. On technology transfer, Mr SIU explained that staff of the New Airport Projects Co-ordination Office were not trained in project management roles and that hardware and software items were the main aspects of technology transfer in the airport project. He re-iterated that the Administration would assume a monitoring role and would duly take into account members’ views. Mr McPherson added that International Bechtel, Inc. (Bechtel) had been chosen through a proper open tender exercise and was acting as the project adviser, and the number of staff of Becthel working on the WCR project was very small in terms of the project’s overall staffing plan. It was envisaged that more local people would be joining the project, and those who would be joining upon completion of the new Airport and the new Airport Railway projects would also bring along their knowledge and expertise.

8. In reply to a member on the conditions of service for KCRC overseas staff and local staff, Mr McPherson said there was no difference for the two categories of staff. As regards the ratio between overseas and local staff in the West Rail project team of the KCRC, Mr McPherson explained that the KCRC had experienced difficulty in recruiting local people as the WCR project was not an approved project and job seekers were generally looking for job security.

Timetable

9. On the revised timetable for implementation of the project, Mr SIU advised that the Administration would take a decision by the end of 1996.

III Modified Technical Studies Programme

Technical Studies

10. In response to members on the need for conducting the two studies on "Safety and Reliability" and "Tunnel Ventilation/Aerodynamics" in Phase I, Mr McPherson advised that since the curvature of the rail, the size of tunnel, ventilation shaft and machinery equipment would all have a bearing on land requirement, the two studies were amongst those with a high priority. As to whether the scope of the technical studies could be reduced, Mr McPherson re-iterated that all studies totaling $750 million would have to be carried out to enable the Government to make its decision. Since land was a major consideration, KCRC would first work out details of the land requirement. As regards the remainder of the technical studies, Mr McPherson advised that these should start about three to four months after commencement of the Phase I programme.

Monitoring

11. On the monitoring of the projects, Mr SIU advised that a new group had been formed under the Managing Board of the KCRC. The group would be responsible for monitoring closely the technical studies. Mr Kevin Hyde revealed that each tender for the technical studies would be assessed by different mix of skilled personnel and KCRC would look at each tender carefully to ensure the best value for money.

Costs of the technical studies

12. A member expressed concern on whether the technical studies would be too detailed and not allow for changes that might increase the economic benefits. He was also worried that the technical studies might pave the way for KCRC to take up the project ultimately, and this would deviate from the Administration’s intention of using the Build-Operate-Transfer (BOT) mode for the WCR. The member suggested that in order to give a chance to other BOT participants, future tendering preference should not be given to KCRC. Mr SIU advised that the Technical Studies would be Government’s indirect asset and would be useful irrespective of who the designer of the project would be. The Administration would monitor progress closely through the monitoring body to be set up.

13. In response to another member on the Administration’s decision-making process, Mr SIU said that the project would still be its 25% stage after the technical studies. Two teams of independent consultants appointed by the Administration, one being responsible for the technical side and the other financial would conduct their own studies. The consultants would concentrate on the land requirements as well as issues raised by members at past meetings. As regards the timetable of the Modified Technical Studies, Mr SIU confirmed that the proposed timeframe was appropriate.

14. A member asked if the technical studies would cost more than $750 million when conducted by phases and how KCRC and the Administration would control the cost. In reply, Mr McPherson advised that no additional cost would be incurred if the two phases were conducted consecutively, although it might cost more if there was a gap between the two phases and people had to be brought back in. He added that tenders had already been invited and KCRC would negotiate with the bidders to request them to conduct the studies in two phases. On the basis for the estimated average consultants’ fee of $800 per hour, Mr McPherson advised that the figure represented the estimated average fees charged by consultants. A member asked for a breakdown for the different levels of staff concerned and Mr McPherson agreed to provide the requisite information.

Co-ordination with the Chinese Government

15. In response to a member on the co-ordination with the future Special Administrative Region (SAR) Government, Mr SIU advised that the decision on WCR would be made by the future SAR Government since the project was expected to commence in 1998. Details on the project had been provided to the Chinese side of the JLG and the Administration would endeavor to explain the project to the future Administration. As to how the project would be reported to the future Chief Executive, Mr SIU admitted that the Administration had not yet formed a view.

Maximum economic benefits

16. On the objectives and measures to ensure maximum economic benefits in choosing the alignment and in the land resumption exercise, Mr SIU said that the Administration had undertaken considerable preparation work in these respects. Mr C K MAK supplemented that the Administration would look at both the environmental impact and the development potential. As regards flood prevention measures when farm land was resumed for the construction of the WCR, Mr MAK pointed out that the Administration had anti-flood measures as well as specific methods of construction for coping with such measures.

Role of Bechtel

17. In response to a member on the role of Bechtel in the technical studies,. Mr McPherson advised that Bechtel would be the project management adviser for taking the project forward. Mr McPherson confirmed that Bechtel’s fees were not included in the $230 million.

Contracts not tendered

18. A member enquired about contracts which were not awarded through tender. He requested a list showing details of these contracts, the firms involved (including Bechtel) and the value of uncompleted works (i.e. the contingent liabilities for KCRC). Mr SIU undertook to prepare such a list which would include also means through which uncompleted contracts would be monitored. He emphasized that as a KCRC Board member, he would ensure that all future contracts would be awarded through tender. Mr Hyde supplemented that for some contracts requiring special knowledge, the Corporation would negotiate the contracts with the consultants. Other contracts were of relatively short duration and awarded through tender with one month’s notice for termination. He confirmed that all core advisers were appointed through proper tendering procedures.

Award of contracts for the technical studies

19. The Chairman invited members to vote on whether they were in support of KCRC proceeding with the award of contracts for Phase I of the Modified Technical Studies. All members present, except for Hon CHAN Wing-chan, agreed that KCRC should proceed. A member urged the Administration to critically review the contracts before these were signed while another remarked that consultants with local experience should be appointed. Mr SIU took note of the members’ views.

IV Follow-up on Legal Empowerment

20. The Legal Adviser briefed members on the subject of Legal Empowerment on the basis of his paper circulated under LegCo Paper No. LS 197/95-96 which had been prepared in response to members’ request. Hon Albert CHAN Wai-yip held the view that KCRC was fully owned by the Government and hence taxpayers should also be regarded as shareholders. He asked how the right of shareholders and passengers could be protected. At the Chairman’s suggestion, members agreed to defer this for discussion at the next meeting.

21. A member suggested that the Administration should narrow down the scope of KCRC’s activities and eliminate grey areas in the new legislation. Mr SIU confirmed that the Executive Council’s direction had lapsed after KCRC submitted the proposal and any further work to be undertaken by the KCRC would have to go to LegCo for approval.

22. Members agreed to schedule another meeting on 2 August 1996 at 8:30 am to discuss issues outstanding from previous meetings.

23. There being no further business, the meeting ended at 10:45 a.m.

Legislative Council Secretariat
30 December 1996

Last Updated on 21 Aug, 1998