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KCR - MTR Merger

8339 Views 12 Replies 9 Participants Last post by  hkskyline
Government approves merger plan for Hong Kong railways

HONG KONG, April 11, 2006 (AFP) - Hong Kong has approved a plan for the city's two railways to merge in a multi-billion dollar deal hoped to see the tiny territory become a key Asian rail hub, officials said Tuesday.

Political leader Donald Tsang said his Executive Council (Exco) cabinet had given the green light for the Mass Transit Railway Corporation (MTRC), which runs the city's hi-tech subway, to join forces with the Kowloon-Canton Railway Corporation (KCRC), which runs cross-border rail services into China.

"The proposed rail merger will bring tremendous benefits to the community," Tsang told reporters, ending two years of speculation on the future of the two networks.

"The travelling public will get immediate benefit from fare reduction on day one of the rail merger," he added. "The integration of the two rail systems will also bring more convenience to passengers through better interchange arrangements."

Transport secretary Sarah Liao said the deal would achieve huge synergies and see local rail fares cut by between five percent and 10 percent as soon as it was signed into law by legislators.

While the high-speed Airport Express service and the cross-border routes will be included in the merger, the new pricing structures will not apply to them, Liao said.

"It is a fair and balanced deal," Liao said. "It will bring us a stronger rail operator that is much more competitive in the China and international arena."

Operations will be merged by allowing the MTRC, a listed company 76 percent owned by the government, to lease the assets of the KCRC over a 50 year period.

The government, which owns the mainline network, will be paid a one-off payment of 4.45 billion Hong Kong dollars (544 million US dollars) by the subway operator and 7.79 billion dollars for a property package.

There will be an additional 750 million annual payment into public coffers and a further annual payment of between 10-35 percent of revenue.

If after 50 years the MTRC has not bought the KCRC outright, it will be able to extend the lease or hand back the railway's assets to the government.

The deal, which is subject to approval by the MTRC's 400,000 minority shareholders and by the city's legislators, will see the yet-to-be-named merged company rationalise equipment and staff, shedding some 600-700 manager-level employees.

"Frontline staff on both railways will not be affected at all," said Raymond Chi'en, MTRC chairman. "And within two to three years we anticipate that synergies will create 1,300 new vacancies."

The railways' merger has been mooted since February 2004 when the government of then chief executive Tung Chee-hwa invited the two corporations to discuss details of a possible merger.

KCRC chairman Michael Tien said the interim period had seen a lot of hard negotiating.

"I'm glad that we've come to a conclusion," Tien said. "We have something that is feasible."

While both corporations are profitable, their railway operations are usually loss-making ventures that are buoyed by lucrative real estate built over the networks' scores of stations.

Tsang said Exco had approved the companies' proposed merger structure and terms and said the resultant organisation would boost Hong Kong as regional rail hub.

"With the fast expanding railway network on the Mainland, the rail merger is a timely move for Hong Kong, which will enhance our ability and potential in connecting with a railway route (in China)," Tsang said.

"This in turn will generate economic benefits and opportunities for Hong Kong."

Liao hopes the merger will take at least a year to be signed into law. However, the proposal must first go to public consultation and will have to be approved by legislators, who are reportedly sceptical of the merger's merits.

Critics are uneasy over a recent management revolt at the KCRC, which saw one senior board member resign and others reprimanded for criticising Michael Tien, the corporation's chairman.

Neither Tien nor Liao would be drawn on the matter and both refused to answer questions on who was likely to head the newly merged company.

"As to the role I play in the railway I cannot answer," said Tien, who's term as KCRC chief expires next year.
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地鐵吞九鐵 長途減價逾一成
4月 12日 星期三 03:30 更新

(星島日報報道 )行政會議昨天通過兩鐵合併方案,地鐵將以一筆過四十二億五千萬及以後每年最少七億五千萬,租賃營運九鐵鐵路服務,營運期高達五十年。合併預計最快在一年後進行,兩鐵票價獲即時下調,十二元以上長途減一成以上,短途亦有百分之五的優惠。特首曾蔭權形容方案對整個社會帶來莫大的益處。

  政府與兩鐵昨日舉行聯合記者會交代兩鐵合併具體細節。財經事務及庫務局局長馬時亨表示,政府和地鐵公司皆同意,以「服務經營權」的形式進行兩鐵合併是最適當的做法。「今次我們沒有賣九鐵這公司,只是鐵路系統租予將來合併後的公司。」在「服務經營權」安排終止時,合併後的公司有責任向九鐵公司交回一個符合當時營運標準的鐵路系統。

  他解釋,九鐵將會給予地鐵「服務經營權」五十年,讓新公司同時負責營運兩套已結合的鐵路網絡。在合併後,地鐵會維持上市公司的地位,但九鐵會保留對九鐵系統的擁有權以及原有的負債。港府消息人士解釋,協同效應必需要長時間才能體現,故設較長的年期。

  在「服務經營權」下,九鐵會先獲得一筆過四十二億五千萬元,往後每年獲得七億五千萬元的固定費用﹔九鐵在合併後第四年起,每年再根據九鐵系統的實際收入,按比例分帳,比例介乎百分之十至三十五。

  地鐵主席錢果豐表示合併產生的協同效應為新公司年省四億至五億元,全部貢獻在減價內,他強調每年減價金額多於此數。

  兩鐵合併首日票價獲即時下調。環境運輸及工務局局長廖秀冬表示,車費每程先減兩角至一元兩角,再加上取消入閘費,令長程路減幅至少一成,中程路則減至少百分之五,個別路減幅更達三成之多。長者假日亦可以兩元乘車,每日受惠人次將達二百八十萬。目前九鐵推出月票優惠,但廖秀冬表示日後會否有優惠仍有待研究。

  港府消息人士解釋,生產力指數設為百分之零點一,原因是鐵路的維修保養資本開支十分重,很多鐵路生產力提升只會很微,「零點一已經很進取,不容易做到」。

  政府昨已與地鐵公司簽訂一份不具拘束力的諒解備忘錄,列明上述方案。由於政府是九鐵的單一股東,並佔地鐵七成六股權,政府在地鐵股東大會上,不會參與投票。換言之合併方案必須得到地鐵小股東的同意。

  廖秀冬指合併涉及修改地鐵及九鐵條例,期望草案能在今夏完成,若一切順利,草案在明年初獲通過,料合併在一年進行。

  特首曾蔭權指,合併方案是一個合理、公平的方案,可加強香港與內地鐵路網絡的聯繫,鞏固香港作為亞洲國際都會的地位。
they said there'll be a new chinese name for the company... mmm... what do you guys reckon?

the english name 'MTR' though will be kept. :)
I think it's called Hong Kong Railways in Chinese
Heung Gong Tik Lo Gun Ci
TAC briefed on way forward for merger of MTR & KCR systems
Thursday, April 13, 2006
Government Press Release

The Transport Advisory Committee (TAC) was briefed by the Administration at its special meeting today (April 13) on the proposed way forward for the merger of MTR and KCR systems.

“The TAC has discussed and offered its views on the Administration’s proposed way forward for the merger of MTR and KCR systems. Members noted that the proposed merger package has met the five parameters set by the Government for the rail merger”, TAC Chairman Ms Cheng Yeuk-wah said.

“The TAC supports the proposal for a rail merger as it will enhance the efficiency of the rail network and bring immediate benefits to the travelling public.”

The TAC has discussed the proposed Fare Adjustment Mechanism (FAM) and the fare reduction package.

“We welcome the proposed introduction of a FAM which will allow fares to go up or down in future according to a formula that is linked to the consumer price index, a wage index and, a productivity factor. Railway fares will be reduced on Day One of the rail merger and the FAM will apply on the basis of the reduced fares. The future fare adjustment process will be more objective, transparent and the adjustment more predictable. This is a major improvement to the existing arrangement whereby the railway corporations have fare autonomy.”

“Members welcome the proposal to reduce fares that will benefit 2.8 million daily passenger trips. Since transport expenditure for long-distance travellers are generally higher, members supported the proposal to provide far greater reduction to this categories of passengers to relieve their financial burden.”

“Members believe this reflects the public aspiration that more assistance should be offered to long distance travellers to encourage cross-district travelling to work”, Ms Cheng added.

“We are pleased to note that passengers on journeys with fares at $12 or above will get at least 10% reduction in their fares. Naturally, the more fare reduction, the more receptive the public would be to the merger package. We have suggested the Administration to continue to listen carefully to and take into account public views in moving forward.”

The TAC noted that the job security for all frontline staff of the two corporations would not be affected as it related to the merger. This would help ensuring the stability and safe operation of the railway systems.

“The TAC noted that the two railway corporations would conduct further studies on the human resource integration and would consult their staff on matters affecting the staff. Members suggested that staff matters should be handled carefully to ensure the safe and efficient operation of the railway service at all times.”

The TAC noted that the post-merger corporation would continue to be subject to the existing regulatory regime and would be required to maintain performance standards not lower than to-day.

“After the rail merger, the Hong Kong Railway Inspectorate will retain the statutory powers to inspect the railway and investigate into railway incidents and accidents. The service and safety of railways and railway operation will be ensured,” Ms Cheng said.

The TAC was also briefed on the structure and financial terms for the proposed rail merger.

“We hope the merger package will be a fair and reasonable deal that could balance the interests of all stakeholders. If implemented, the rail merger will create a very strong Hong Kong-made railway operator who will be more competitive and in a better position than before to expand into the Mainland and overseas markets,” Ms Cheng added.
spicytimothy said:
I think it's called Hong Kong Railways in Chinese
Heung Gong Tik Lo Gun Ci

wud wud english name
they should change it as well
What will happend with the logos?
Anekdote said:
What will happend with the logos?
i don't think they'll change the logo... :) so very likely MTR's logo will be used across all networks.
Changing power supply companies after the railway merger?!

There are reports from today's Singtao Daily and its sister English newspaper The Standard for the merged railway company would use the power supply in China to force the two HK power suppliers to lower the price. Here’re the reports from the two newspapers. :|

Singtao Daily:

兩 鐵 合 併 謀 逼 減 電 費




市 民 盼 兩 鐵 車 資 下 調 , 減 輕 日 常 交 通 費 負 擔 。

  (星島日報報道 )兩鐵合併成為爭取減電費的有利契機。消息人士表示,政府研究現時每年繳交近十億元電費,用電量達中電售電量百分之四的兩家鐵路公司,透過九鐵羅湖站的電網,與內地深圳的供電網接通,從而為整個鐵路網絡供電,打開兩電壟斷的缺口。有立法會議員相信,如果兩鐵獲減電費,料車費有進一步削減空間。

  港府剛完成電力市場未來路向的第二階段諮詢,去年底發表的《香港電力市場未來的發展第二階段諮詢文件》中,強調本港電力市場是開放,建議在○八年後密切留意從廣東省引入新電源的機會,並為內地向本港輸電作出準備。同時建議要求兩電開放電網,讓第三者接駁或使用。

  目前九鐵使用中電提供的電力,地鐵則向中電及港燈兩者購電。消息人士透露,港府有意透過鐵路網絡,打開電力市場的缺口。該名人士解釋,兩鐵本身各自擁有龐大的獨立電網,鐵路網在地理上亦與廣東省南方電網相近,在概念上,若南方電網伸延一段到羅湖站,已能為整個鐵路網供電,毋須斥巨資大舉興建電網,亦毋須等待兩電願意租出電網,便能為本港電力市場打開缺口。

  對於駁通內地電網供電給兩鐵的技術是否可行,該名人士指,實際上只需在鐵路網內興建多個變壓站,便能利用新電源。不過,該名人士承認,供電可靠及穩定性,始終是鐵路公司首要考慮的因素。

  據了解,兩鐵作為兩電的大客戶,每年均向兩電要求檢討電費﹔近日亦已就未來可能合併,成為一間更大的機構後,再向兩電作出減價要求。

  內地電力成本相對本港便宜,消息人士稱,對於新鐵路公司而言,未來將有多一個電力來源供選擇,此舉亦能增加與兩電談判電費的籌碼。

  立法會經濟事務委員會委員李華明相信,兩鐵合併後成新公司將更有利爭取減電費,而且即使開放電網不會在○八年前發生,但○八年後絕對有條件開放電網,內地電力公司可以向兩鐵供電,兩鐵有更多選擇。

  他承認兩鐵亦要確保供電的穩定性是否達到合理水平,但目前九廣鐵路深廣段均是用內地電力,看不到有太大穩定性的問題。他亦認為,兩鐵若日後獲減電費,乘客的車費將有進一步減價空間。



The Standard:

Power pair face blow with railway merger

The Hong Kong government is likely to urge the merged MTR Corp and Kowloon-Canton Railway Corp to buy electricity from a supplier other than CLP Power and Hongkong Electric.


Staff reporter

Monday, April 17, 2006





The Hong Kong government is likely to urge the merged MTR Corp and Kowloon-Canton Railway Corp to buy electricity from a supplier other than CLP Power and Hongkong Electric.

The introduction of a new supplier will help the government break the long-time duopoly in the territory, pressuring the two companies to cut prices, according to a source close to the government.

It will also help open up Hong Kong's electricity market and thereby allow the territory's residents and corporations to reduce their power bills, analysts said.

"We would like to bring more pressure on [them] to cut prices before the introduction of a newcomer," the source told Sing Tao Daily, sister paper of The Standard.

"The proposed third party probably will be China Southern Power Grid, as its network is located near KCRC's Lo Wu station."

At present, Hongkong Electric supplies power to Hong Kong Island while CLP focuses on Kowloon and the New Territories.

"It would be feasible for China Southern Power Grid to extend its network to connect its electricity access with the Lo Wu station, allowing it to save time on building a new electricity grid," the source said.

He added the merged railway entity is likely to incur lower power bills if it sources its electricity from a third supplier.

Last year, the two railway operators spent a combined HK$1 billion to buy electricity from both CLP Power and Hongkong Electric.

Under the merger proposal unveiled by the government last week, MTRC will lease KCRC's rail network for 50 years in return for an upfront payment of HK$4.25 billion and an annual payment of HK$750 million.

When merged, the two railway operators are expected to use a single source of electricity.

China Power International Holdings became the first challenger to Hong Kong's power duopoly earlier this year.

At that time, the company, which is one of the mainland's five largest power providers, said it would partner with China Southern Power Grid to break into the Hong Kong electricity market within the first half of this year by supplying power to a small group of industrial and commercial users.

Last year, the government released its Stage II consultation paper for the development of Hong Kong's electricity market beyond 2008.

The government proposed a new scheme of control, to come into effect in 2008, defining its relationship with the two existing electricity suppliers. Under the new regime, the permitted rate of return for the duopoly will fall from the current 13.5 percent to as low as 7 percent while new licenses for operation will be valid for 10 years as opposed to 15 years.

The proposals will imply tariff cuts of 15 percent to 21 percent for CLP and 22 percent to 30 percent for Hongkong Electric in 2009, analysts said.

The proposal is strongly opposed by the two power firms, with CLP saying its relationship with the government is in danger of breaking down.




You may also read the thread of Third Electric Power Supply Company in HK? [Disscus!] :|
Rail users set for easier journey after merger
Hong Kong Standard
Tuesday, August 28, 2007

Commuters will enjoy a fare cut and hassle-free interchanges when the Mass Transit Railway and Kowloon-Canton Railway finally merge.

However, the actual date when the two railways will come together will only be set after a shareholder meeting in October.

MTR Corp merger integration general manager Adi Lau Tin-shing told a press conference that 110 ticket gates will be removed from the interchange stations at Kowloon Tong, Mei Foo and Nam Cheong.

"It will save our passengers the trouble of queuing up for entry or exit. We estimate about half or one minute can be saved," Lau said.

Lau also stressed that on the day of the official merger passengers will enjoy an immediate fare concession.

However, the interchange discount is restricted to Octopus card holders.

Those using single journey tickets will still need to buy a second ticket when changing systems. "We can expect a better arrangement within a year of the merger," Lau said.

He said construction work on removing unnecessary ticket gates and other amenities for the merged railway will begin once shareholders reach a consensus on the exact day.

With the removal of the ticket gates, Lau said the passenger walkway to the northern concourse of Kowloon Tong KCR station will be widened from 9.3 meters to 12.5m, meaning peak hour capacity of 10,000 passengers can be increased to about 30,000.

In mid May, tests were done to determine the construction plan and to minimize passenger inconvenience. Construction cost is about HK$40 million.
Hopefully the merge will improve the system to make it smoother :)
MTR ready for fares chaos as systems merge 2 charging schemes will be one
11 September 2008
South China Morning Post

The MTR is bracing for possible chaos at the end of this month as it completes the final merging operation of its two rail systems.

On the last Sunday of the month, fare concessions extended to Octopus card users since the merger between the MTR and former Kowloon-Canton Railway Corporation will be extended to the 200,000 non-users as the two charging systems are replaced by a new one.

Turnstiles at the three interchange stations at Mei Foo, Nam Cheong and Kowloon Tong which used to set the MTR network apart from the KCRC's will be dismantled.

But the gate blocks will remain until the new charging system proves to be running properly, with the MTR Corp prepared to revert to the old system if anything went wrong.

Although it says staff have done their best to prevent any problems, executives are prepared for a possible repetition of the overcharging blunders that plagued the MTR Corp during the merger last year.

General manager for marketing and station business Jeny Yeung Mei-chun said in case of any chaos with the new system the company would revert to the present fare structure.

"We carried out thorough testing on most movements within the network, but we have 82 stations and the route combinations for them all are huge, we cannot possibly test all of them," Ms Yeung said.

"If there really are problems on some special trips, such as one in which you need to switch routes five times, or other unforeseeable troubles, we can always switch back to the present system."

But the company's operations head Wilfred Lau Cheuk-man said the chance of reversion was small as unlike the time of merger, the only change Octopus card users face this time was having to pass through two fewer turnstiles.

Hundreds of passengers each were overcharged between 60 HK cents and HK$5.80, while others were undercharged because of a glitch in the fare calculation software in December. Passengers using cards are encouraged to double check the amount and report any mistake, although the corporation said its engineers would monitor the situation daily.

To ensure smooth traffic, the turnstile blocks will be covered by yellow cloths so commuters who switch lines can easily walk through.

Those seeking to leave the stations should look for green signs instead. Dozens of assistants in yellow suits and blue caps will be on hand to advise people who get lost.

With the two rail networks eventually becoming one, the MTR Corp would also extend the maximum travelling time allowed within the network from 90 minutes to three hours, but the penalty for those who break the rules would also be raised from up to HK$36 to HK$51.

Manager for corporate affairs Miranda Leung Chan Chi-ming expected the disused turnstile blocks to be removed before December.

The 3.5 million daily MTR Octopus card passengers began enjoying fare cuts of up to 35 per cent when the systems merged on December 2.

Meanwhile, commuters on a single journey ticket would still have to pay for an extra trip when they switch trains between the East Rail and the Tsuen Wan Line at Tsim Sha Tsui. This is because the tunnels connecting the two stations is considered public space and cannot be a paid area.

Students who now pay half-price fares on the old MTR network will also be able to enjoy the same benefits on East Rail, West Rail and Light Rail lines on the same day, and the minimum value-added amount on their cards will be cut from HK$50 to HK$10.
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