PLC Paper No. CB(1) 1057

Ref: CB1/BC/8/97/1

Report of the Bills Committee on the Kowloon-Canton Railway Corporation (Amendment) Bill 1998

Purpose

This paper reports on the deliberations of the Bills Committee on Kowloon-Canton Railway Corporation (Amendment) Bill 1998.

Background

2. The existing provisions of the Kowloon-Canton Railway Corporation Ordinance (the Ordinance) empower the Kowloon-Canton Railway Corporation (KCRC) to operate the Kowloon-Canton Railway (East Rail) and to construct and operate the North-west Railway (Light Rail). In the years to come, KCRC will construct and operate certain priority railway projects including West Rail, the Ma On Shan to Tai Wai Rail Link and East Rail Extension from Hung Hom to Tsim Sha Tsui. However, the Ordinance, as it now stands, does not empower KCRC to construct and operate new railways.

3. Government will need to inject equity into KCRC for the construction of new railways. KCRC will also need to obtain commercial loans to finance any remaining project costs. However, unlike the Mass Transit Railway Corporation Ordinance (MTRC Ordinance) and the Airport Authority Ordinance (AA Ordinance), the Ordinance does not provide for Government's ownership through share holding. This lack of a proper share capital structure may create unnecessary difficulties for KCRC in raising commercial loans. In addition, the provisions relating to borrowing by KCRC are not comprehensive enough and the Ordinance does not allow KCRC voluntarily to declare and distribute dividends as is the usual commercial practice.

4. At present, every time the construction of a new railway is completed, the Ordinance will have to be amended and a new Schedule to be included in order to vest the required land in KCRC. Where additional land is required for operational purposes or where vested land is no longer required, the Schedules will have to be amended before changes to the area of vested land can be effected.

The Bill

5. Introduced into the Council on 11 February 1998, the Bill seeks to address the above deficiencies by introducing the following amendments -

1. empowering KCRC to construct and operate new railways which are authorized by the Secretary for Transport;
   
   
2. providing a proper share capital structure and powers to borrow for KCRC, which are modelled to a considerable extent on the MTRC Ordinance and AA Ordinance, and enabling Government to inject equity into KCRC for the construction of new railways; and
   
   
3. introducing a more efficient mechanism whereby the vesting or divesting of land will be effected by way of the Director of Lands depositing in the Land Registry a plan showing the details of vesting or divesting.

6. Other provisions of the Bill provide for the following matters -

1. the operation and regulation of carparks constructed in association with the railways and managed and controlled by KCRC;
   
   
2. transferring the power to make regulations concerning routine matters relating to the operation of the railways from the Chief Executive in Council to the Secretary for Transport; and
   
   
3. repealing the provision on acquisition of land by Government for KCRC (section 28), as land for new railway projects will be resumed under the Railways Ordinance and KCRC will be paying for land acquisition costs.
   
   

The Bills Committee

7. At the House Committee meeting held on 13 February 1998, members decided to form a Bills Committee to study the Bill. The Bills Committee met on 24 February 1998 and Hon Mrs Miriam LAU was elected chairman. The membership list of the Bills Committee is at Appendix I.

8. The Bills Committee completed its discussion with the Administration and the scrutiny of the Bill in one meeting.

Deliberations of the Bills Committee

9. In general, members support the amendments proposed in the Bill. The main deliberations of the Bills Committee are summarised in paragraphs 10-12 below.

Land no longer required by KCRC

10. Notwithstanding the proposed provision in new section 7B(1)(a) and (b) of clause 5 which will provide the Director of Lands with the power to divest land which is no longer required by KCRC for operational purposes, members consider it necessary to require KCRC to notify the Director of Lands on its initiative of any land that is no longer required for operational purposes. The Administration accepts members' suggestion and proposes to move an amendment to the Bill.

11. Members are of the view that the drafting of both the Chinese and English versions of new section 7B(2)(b) in clause 5 of the Bill, which reads

and "remove all buildings and structures and thereafter reinstate the land, to its former condition or otherwise, to the satisfaction of the Director." respectively, is unsatisfactory. The Administration agrees to amend section 7B(2)(b) of clause 5 to improve the drafting.

Commencement date of the Bill

12. The Administration informs the Bills Committee that it intends to move a Committee stage amendment to delete clause 1(2) which reads "This Ordinance shall come into operation on a date to be appointed by the Secretary for Transport by notice in the Gazette.". The Administration explains that the commencement notice, which is subsidiary legislation, is subject to the Council's scrutiny under section 34 of the Interpretation and General Clauses Ordinance. As the Council will unlikely have meetings after 8 April 1998, and in order to put the Bill into operation once it is enacted by the Council so as to enable Government to inject equity into KCRC at the earliest possible time, the above-mentioned clause should be deleted so that the Ordinance will come into operation once it is gazetted. Members accept the Administration's explanation.

Conclusion

13. Subject to the Committee stage amendments mentioned above and other technical amendments to be moved by the Administration at Appendix II, the Bills Committee supports the Bill.

Recommendation

14. The Bills Committee recommends the resumption of the Second Reading debate on the Bill on 25 March 1998.



Provisional Legislative Council Secretariat
3 March 1998

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Appendix I

Bills Committee on
Kowloon-Canton Railway Corporation (Amendment) Bill 1998