MTR Corporation faces HK$3 billion bill as more railway projects go over budget

Cost overruns have hit two more railway projects, landing the MTR Corporation with a bill for an extra HK$3 billion.

As he announced the railway operator's interim results, CEO Lincoln Leong Kwok-kuen revealed the final bill for the 7km South Island Line would be HK$16.9 billion, an increase of HK$1.7 billion on the previous estimate. The 2.6km Kwun Tong Line extension will cost HK$7.2 billion, 22 per cent more than previously estimated.

The news is another blow to the MTR, which has been hit with a series of delays and cost overruns on its ambitious expansion projects, most notably the cross-border line to Guangzhou. This has tarnished the firm's reputation, and seen Leong's predecessor, Jay Walder, depart before finishing his contract.

Leong cited "challenging" works at Admiralty, where the South Island Line will connect to the network, and at the future Whampoa station on the Kwun Tong Line, for the delay, as well as "continued labour shortages".

"We understand the public concerns. But there are always unforeseeable challenges in building complex and massive rail projects," Leong said.

The completion date for the Kwun Tong work has also been pushed back by between three and six months from the original mid-2016 target. The opening of the South Island Line, which was originally budgeted at HK$12.4 billion, has already been pushed back from this year to the end of next year.