Hong Kong rail operator MTR Corporation (MTRC) said yesterday it had signed a Memorandum of Understanding (MoU) with two mainland firms to invest up to 2.4 billion yuan (US$290 million) in a metro rail line in Beijing - one of the four subway lines planned for the 2008 Olympic Games.
MTRC said it signed the MoU with Beijing Infrastructure Investment and Beijing Capital Group - both owned by the Beijing municipal government - to build the 16-billion-yuan (US$1.93 billion), 28.65-kilometre Beijing Metro Line 4.
The line will act as the capital"s main north-south public transport artery - the city currently has a circular line and an east-west metro line, but no route links the south of the city with the sprawling northern suburbs.
An MTRC spokeswoman told Reuters that the firm"s stake in the joint venture would not exceed 15 per cent.
Final details involving the stake-holding structure and total invested capital are expected to be hammered out over the next few months, with final co-operation to be reached during the third quarter.
MTRC Managing Director Phil Gaffney was quoted by AFX news as saying on the sidelines of yesterday"s signing ceremony in Beijing that the firm"s experience in running mass transit operations in Hong Kong would enable it to be involved in the future operations of the Beijing subway line.
"The subway will be a Beijing operation with Hong Kong characteristics, with Beijing partners managing the operation, and we providing guiding directions from our Hong Kong practice," he was quoted by the news agency as saying.
Gaffney added that MTRC is also interested in examining investment opportunities in three other subway lines that the Beijing government plans to build over the next four years as the city gears up for its first Olympics.
"We are very interested in the other subway lines, so if opportunities come up, we will start examining (possibilities for investment)," Gaffney said.
Beijing has also opened tenders on three other planned subway lines to attract domestic and foreign investors to help build related infrastructure in the capital over the next four years.
The No 5, 9 and 10 subway lines, which will possibly involve outlays of 12 billion yuan (US$1.45 billion), 6.7 billion yuan (US$809 million) and 15.4 billion yuan (US$1.86 billion), respectively, are also open for investment through public private partnership (PPP).
Under the PPP scheme, up to 49 per cent of the funds needed are expected to come from domestic and foreign players, according to tender plans issued by Beijing Infrastructure Investment.
MTRC, which was recently invited by the Hong Kong government to negotiate a possible merger with Kowloon-Canton Railway Corp, has been looking for new sources of revenue.
Its Hong Kong railway and property organizations have stagnated in recent years, and in addition to the MoU signed with the Beijing authorities, MTRC is also taking part in a 6-billion-yuan (US$725 million) project to extend the Shenzhen metro system.
MTRC is also part of a consortium bidding for a C$1.5-1.7 billion (US$1.14-1.29 billion) project to construct and run a 19.5-kilometre rapid transit line linking Vancouver with its international airport.
"Whilst Hong Kong always remains MTR"s home, we are looking beyond Hong Kong for business opportunities to generate new revenue and profit streams for the benefit of Hong Kong and our shareholders," CK Chow, MTRC"s chief executive officer, said in a statement.
Shares in MTR closed 1.68 per cent lower yesterday at HK$11.70, almost unchanged from a month earlier.
