The company running London’s Crossrail line will ask for a two-year extension that its £1.4bn contract allows after the project was delayed for years beyond its completion date.
MTR, a Hong Kong-listed company, already operates services on the completed end sections of the new £17.6bn east-west railway through its subsidiary MTR Crossrail. But it faces waiting up to late 2021 until the central portion of the line is open. Its contract is due to expire in 2023 but it includes the option for a two-year extension.
Jacob Kam, chief executive of MTR since the start of April, told the Financial Times that MTR Crossrail would seek to exercise the option. “Once we have started a job, we want to do it well,” he said. “So we want a reasonable timespan so we can bring the line up to the level we expect.”
Mr Kam said the new management team completing Crossrail’s construction was “taking control of the situation” and trying to be “realistic” about when the line might be fully open. “If we push it too hard, we might not get the product that we want, but if we’re too relaxed we’ll never get it done,” he said.
He argued that Crossrail could have involved MTR earlier in the project, although he conceded that would have been more expensive. “Now we have more involvement in the project delivery, so I feel much more comfortable that we can eventually deliver a very good service to the customers of Crossrail.”
Transport for London, which oversees Crossrail, said any contract extension would not go beyond 2025. “The delayed opening of the central section of the railway will not change the length of contract with MTR Crossrail that is due to run until 2023, with the option of a two-year extension,” a spokesperson said.
Mr Kam said MTR’s problems in its domestic network over the past year would not affect its bid to run HS2, the UK’s planned high-speed rail service from London to northern England. “MTR has considerable proven experience in taking on and improving the customer and operational performance of railways that it operates,” he said.
MTR, which is 75 per cent owned by the Hong Kong government, is one of two remaining bidders to run the UK’s expanded West Coast service. This is scheduled to include high-speed rail services on a new line from 2026 as part of the £56bn HS2 project. It already runs the South Western Railway franchise with FirstGroup. The government is due to announce the winner this year but the decision has already been postponed.
Since May 2018, Hong Kong media have revealed multiple construction scandals relating to the HK$97.1bn (US$12.4bn) Sha Tin-Central rail link extension project. The interim report from a government-commissioned inquiry determined that a station’s construction work “was not executed in accordance with the contract”, and in January 2019 MTR admitted that 60 per cent of the records relating to a crucial part of the project had gone missing.
Meanwhile, in October 2018 there were prolonged delays on the network, which normally has a 99 per cent on-time performance record, and in March 2019 a signal failure led to a train crash that shut down one of the busiest sections of the network. The problems led to the resignation of Mr Kam’s predecessor.
Mr Kam defended MTR, saying that despite local media reports, the company’s share price hit an all-time high of HK$49.5 two weeks ago. “The market has a clearer view of what’s going on,” he said.
The construction problems stemmed from the Hong Kong government encouraging the company to build five lines at once, Mr Kam said, and from MTR quickly expanding its project management team tenfold in response: “We had not done the indoctrination work properly. People brought with them different practices, some of them are not to our standard.”
Mr Kam said this rapid expansion and the company’s “cumbersome” record-keeping system had led to people cutting corners and failing to fill in the paperwork at the time. He dismissed the idea that the paperwork had been filled in and later destroyed as construction problems came to light.
The commission of inquiry into the construction problems and missing paperwork will give a final report in August.
Mr Kam suggested that the UK’s rail franchise system was turning off bidders because the government had not got the “risk-reward balance” right. “Tendering will bring in better prices for government, but tendering of course will reduce the level of reward . . . We need to let the market maintain the right balance.”
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