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MTRC paying dividend to the Government
Following is a question by the Hon Zachary Wong, and a written reply by the Secretary for the Treasury, Mr KC Kwong, in the Legislative Council today (Wednesday):
Question:
It is learnt that the Mass Transit Railway Corporation (MTRC) plans to pay a dividend to the Government this year. In this connection, does the Government know;
(a)
whether the decision to pay a dividend was made by the MTRC on its own initiative or in response to the Government's request, and what the major reasons for such decision are;
Reply:
(b)
of the total amount of the dividend to be paid; and
(c)
Mr President,
(a)
in view of the plan of the MTRC to spend more than a billion dollars on a phased refurbishment of its train cars in the middle of the year, to carry out improvement works to ease congestion at the Quarry Bay station, to raise funds for the construction of the Tseung Kwan O extension, as well as to repay the loan for the Airport Railway, whether the decision to pay a dividend to the Government this year will result in additional financial burdens on the MTRC and cause the company to run into greater debts?
The Mass Transit Railway Corporation (MTRC) is a statutory body required by law to operate in accordance with prudent commercial principles. As with other commercial organisations, the decision on the declaration and payment of a dividend is made by the MTRC Board, under the MTRC Ordinance, having regard to its operating results, overall financial position as well as its immediate and long term funding requirements. This also takes into account the rational expectation of MTRC's shareholder of an acceptable level of return on the public investment in the Corporation. It is expected that dividend payments would be made to the Government, starting 1997, now that the accumulated losses of MTRC are fully eliminated. This expectation is also recorded in Clause 2(J) of the Financial Support Agreement between the MTRC and Government, which forms the basis for financing the Airport Railway project.