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History

About KCRC

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The idea of constructing a railway between Hong Kong and Mainland China was first put forward as early as 1864 by a British railway engineer, Macdonald Stephenson, who had played an important role in the initial development of railways in India. Unfortunately he found little support from either the Imperial Chinese Government in Peking or most of the prominent businessmen in Hong Kong, and the idea was not given further serious consideration for about the next 30 years.

The idea re-emerged in the 1890s as a result of the various European powers competing to extend their influence in China. The British Government was particularly concerned about competition from the French in Southern China, and obtained a number of railway concessions from the Imperial Chinese Government for the British & Chinese Corporation, a joint venture formed in 1898 between the trading company of Jardine Matheson & Co and the Hong Kong and Shanghai Bank. These concessions included the right to construct and operate a railway from Kowloon to Canton.

While some preliminary survey work was undertaken, obtaining funds to construct the railway proved difficult. In late 1904 it was decided that the length of railway within Hong Kong, from Tsim Sha Tsui to Lo Wu (the British Section), would be constructed by the Hong Kong Government, leaving the rest of the railway from Lo Wu to Canton (the Chinese Section) to be constructed by the British & Chinese Corporation.

Following detailed surveys to decide the final route of the railway, the Public Works Department of the Hong Kong Government started construction of earthworks on the section from Tai Po Market to Fan Ling in December 1905.

Construction of the railway proved more difficult than first thought due to obstacles such as shortages of skilled labour, a high rate of sickness in the workforce from malaria, beri beri and dysentery, and the difficult ground conditions encountered in building the Beacon Hill Tunnel. The Kowloon-Canton Railway (KCR) finally came into service on 1 October 1910 as a single track system.

At that time, KCR trains could run only on the British Section. It would not be until one year later on 5 October 1911 that the Chinese Section to Canton was completed, only 5 days before the outbreak of the 1911 Revolution that ultimately led to the abdication of the last Qing Emperor in 1912.

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When KCR British Section was opened in 1910, there were only seven stations i.e. Kowloon (temporary), Hung Hom (until 1921), Yaumati, Sha Tin, Tai Po, Tai Po Market (a flag station before November 1910) and Fan Ling. In 1912, the narrow-gauge Sha Tau Kok branch line was opened to link up Fan Ling and Sha Tau Kok. In 1913, Tai Po Market station was turned into a station of classical Chinese architectural style, and a halt at Sheung Shui was added. In 1916, a permanent Kowloon Terminus at Tsim Sha Tsui, which commenced construction in 1911, was completed.

Until the opening of the Chinese Section, traffic on the KCR was limited, as there was little demand for passenger and freight services by the inhabitants of the then undeveloped New Territories. After 1911 traffic increased over the years. However, in 1928, the Sha Tau Kok branch line was closed due to competition from an adjacent newly opened road. In 1938, the Japanese army cut the KCR line some 15 miles north of Hong Kong in order to cut out supplies from Hong Kong into Mainland. Services in the British Section were then disrupted by the Japanese invasion of Hong Kong three years later in 1941. During the Japanese occupation of Hong Kong, the railway had deteriorated, with much of the railway equipment and rolling stock being sent into China for use by the Japanese forces there.

Following the end of the war, traffic quickly recovered but through-train services for both freight and passengers were again halted after 14 October 1949 when the People's Liberation Army captured Canton. Lo Wu Station was then added as the terminus of the KCR British Section at the boundary, and both passengers and freight had to be transshipped at Lo Wu between separate trains operating on the Chinese and British Sections. In 1950, through-train freight services resumed, and by 1979, through-train passenger services to Guangzhou also resumed. During this period, a single line Wo Hop Shek Spur Line was opened (1950) to serve the new cemetery there. A station was added at Ma Liu Shiu (1956), and in 1975, Kowloon Terminus at Tsim Sha Tsui was replaced by a new Kowloon Terminus at Hung Hom. Racecourse Station came into service in 1978 to tie in with the opening of the Sha Tin Racecourse.

When KCR commenced operations in 1910, trains were hauled by steam engines. After years of service, their conditions deteriorated and they were also costly to operate. In 1955, diesel electric trains were first introduced and proved to be an operational success. By 1962, all steam trains were replaced by diesel trains.

In the 1970s it became clear that a major change was needed if the railway was to cope with future demands both in terms of trade with China and the anticipated increase in domestic passenger demand arising from the Hong Kong Government's plans to construct large new towns at Sha Tin, Tai Po, Sheung Shui and Fan Ling.

In 1974 a 10-year investment programme was started to electrify and double-track the railway from Hung Hom to Lo Wu, requiring the building of a second Beacon Hill tunnel together with the construction and upgrading of stations and other facilities. The first stage was opened on 6 May 1982, with the start of an inner suburban service between Kowloon and Sha Tin and a new station at Kowloon Tong.

The second stage between Sha Tin and Tai Po Market was opened on 2 May 1983. Tai Po Kau and old Tai Po Market Stations ceased operation, the latter being replaced by a new station further south. On 15 July 1983 electrification and double tracking of the full line to Lo Wu was completed, and the use of diesel trains then ceased for domestic passenger services. in In August, 1983, a temporary station at Tai Wai was added.

Prior to 1982, KCR was operated as a Government department but in December of that year, the Kowloon-Canton Railway Corporation was established through the enactment of the Kowloon-Canton Railway Corporation Ordinance. The Corporation is wholly government owned, with a Managing Board, whose members are appointed by the Chief Executive of the Hong Kong Special Administrative Region, monitoring its operations.

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Since 1982 KCRC has greatly expanded its rail network. In 1984 the Corporation accepted the Government's invitation to build and operate a light rail system in the North West New Territories. Feeder bus services were first introduced in 1986. Light Rail commenced service in September 1988, initially serving the new towns of Tuen Mun and Yuen Long, and later extended to serve the Tin Shui Wai new town.

The 1990s saw the beginning of what would be a 10-year programme of major expansion of the heavy rail. The original Kowloon-Canton Railway was first renamed as East Rail in 1996. Construction of West Rail, which provides a mass transit rail service between Tuen Mun and Yuen Long in North West New Territories and Nam Cheong in urban Kowloon, began in 1998. West Rail commenced operation in December 2003, with Light Rail assuming an additional role of providing complementary services to the new line.

Planning also began in 1998 on three extensions to East Rail. In October 2004 the opening of the Tsim Sha Tsui Extension extended East Rail southwards from Hung Hom to East Tsim Sha Tsui. In December of the same year, Ma On Shan Rail came into service, serving the North East New Territories with easy access to East Rail via Tai Wai Station. August 2007 saw the opening of the final extension, Lok Ma Chau Spur Line, which provides a convenient second railway crossing for passengers to enter the Mainland at Lok Ma Chau.

Another project awarded to the Corporation in 2002 was the Kowloon Southern Link (KSL), which is a natural extension of West Rail from Nam Cheong Station to East Tsim Sha Tsui Station. The project also included a pedestrian subway extension from the latter station to the shopping area at Canton Road. Construction works began in November 2005.

In June 2002, following a competitive process, the Corporation was awarded the bid to plan, build and operate the Sha Tin to Central Link (SCL). Also in the same month, the idea of a merger of KCRC and the MTR Corporation Limited (MTRCL) was first floated by the Government. This culminated in the merger of the railway operations of the two companies in December 2007, when KCRC granted a service concession to MTRCL to operate its railway system for an initial period of 50 years in return for the MTRCL making fixed and variable annual payments to the Corporation. KCRC remains the owner of the KCRC network and associated railway assets, with MTRCL required to return these assets at the expiry of the Service Concession unless the latter is extended.

On the rail merger in December 2007, KCRC appointed MTRCL as the project manager for on-going KSL works, with KCRC being still fully responsible for financing the project till completion. The KSL was opened for passenger operation in 2009, and has now become part of the West Rail Line.

Following the rail merger in December 2007, MTRCL also took over responsibility for further planning, design and construction of the SCL project. Construction commenced in 2012. The Tai Wai to Hung Hom section is expected to be completed in 2018, and the Hung Hom to Admiralty section in 2020. The Government has indicated that upon completion of the project, it may vest the railway in or lease it to the KCRC. The Corporation would in turn be expected to include the railway into the service concession granted to the MTRCL in exchange for receiving appropriate fixed and variable annual payments.

As of mid-2014, KCRC owns a railway system (operated by MTRCL) that has expanded from a single railway track of only 35 kilometres into a modern comprehensive heavy and light rail network of over 120 kilometres, comprising the current East Rail Line, West Rail Line, Ma On Shan Line, Lok Ma Chau Spur Line and a light rail network in North West New Territories. There is also a network of complementary feeder bus services. Through-train inter-city passenger services are run between Hong Kong and six Mainland cities, including Beijing and Shanghai. Average ridership on the whole KCRC-owned rail and bus network now exceeds 2.4 million per day.

In order to help fund the construction of its expanded network, KCRC had undertaken a number of property development projects since 1982. These took the form of joint ventures with private developers to build residential developments, often with commercial facilities, on sites adjacent to and atop railway stations. KCRC’s first residential development, Pierhead Garden at Tuen Mun, was completed in 1988. By 2007, five more residential developments and two commercial facilities had been completed, yielding a total of over 760,000 and 340,000 square metres of residential and commercial floor areas respectively. Planning and construction were also underway for more than a dozen property sites along Light Rail, East Rail, Ma On Shan Rail and West Rail (those along West Rail were being developed by KCRC on behalf of the Government). KCRC also provided property management services for eight residential and commercial developments. As part of the rail merger in December 2007, with the exception of those sites along West Rail, MTRCL purchased the Corporation’s then existing subsidiaries providing property management services as well as the property development rights for all sites then under development. KCRC remains responsible for developing the West Rail sites with MTRCL as its development agent.

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On 25 June 2002, the Government first publicly indicated that it was considering the possibility of a merger between the Corporation and the MTRCL. In February 2004 the Government invited the two corporations to commence discussions on a possible merger. In September 2004 the corporations submitted a joint merger report to the Government.

In April 2006 the Government and the MTRCL signed a non-binding Memorandum of Understanding on the structure and terms for the proposed rail merger.

In June 2007 the Legislative Council passed the Rail Merger Bill, and subsequently in July the by-laws and regulations applying to the merged rail network were also passed. In August 2007 the Corporation's Managing Board gave its approval to the signing of the rail merger transaction documents. In October 2007, MTRCL's independent shareholders approved the rail merger package at an Extraordinary General Meeting.

On 2 December 2007 the Rail Merger Ordinance came into effect. The Rail Merger Ordinance expressly empowered KCRC to grant a service concession to MTRCL and expanded the scope of MTRCL's franchise to enable it to take up the operation of KCRC's transport services.

The rail merger comprised two key components. The first was a Service Concession Agreement whereby MTRCL was granted the right for an initial period of 50 years (which is extendable) from 2 December 2007 to use KCRC's railway assets to operate the existing KCR railway lines and other transport-related businesses such as bus operations in the North-west Transit Service Area, and upon their completion, the new KCR railway lines then currently under construction. In return, the MTRCL was required to make a fixed annual payment of HK$750 million to KCRC, and after 36 months, an additional variable payment based on a percentage (which is on an increasing scale) of the annual gross revenue in excess of HK$2.5 billion generated from the KCRC railway assets.

The second key component was a Sale and Purchase Agreement, whereby on 2 December 2007 MTRCL purchased at a sum of HK$7.79 billion a number of KCRC properties and property management subsidiaries, and made a further payment of HK$4.25 billion for the Service Concession and the purchase of certain railway assets of KCRC such as stores and spares.

Following the merger of the operations of the rail systems of KCRC and MTRCL, KCRC has become primarily an asset holding corporation under the direction of a Managing Board composed wholly of senior public officials appointed by the Chief Executive of the Hong Kong Special Administrative Region. The Corporation is responsible for monitoring that the MTRCL complies with the terms of the service concession agreement. Its other functions include investment of the annual payments from the MTRCL, servicing the Corporation’s outstanding debts, and managing its subsidiaries, including those involved in the development of the property sites along the West Rail Line on behalf of the Government.

In respect of these West Rail property sites, the KCRC Chief Officer is the Chairman of the managing board of West Rail Property Development Limited (WRPDL) (its shareholders being the HKSAR Government and KCRC) which is responsible for implementation of the various developments on behalf of the Government, with MTRCL now being the development agent for WRPDL. The first of these projects at Tuen Mun Station was completed in 2013. As at June 2014, there are seven more to be completed in the coming few years: four developments near Tsuen Wan West Station, one at Nam Cheong Station and another two at Long Ping Station, with another three projects under planning.

The Corporation is now served by a very small number of staff, having decided to outsource many of its routine administrative and specialist support functions. The Board is chaired by the Secretary for Financial Services and the Treasury of the HKSAR Government, and the management is headed by a Chief Officer.

Since the merger, KCRC’s operating profit before depreciation has risen from $800 million in 2008 to HK$2,360 million in 2013, mainly due to increases in the variable annual payments from MTRCL which first commenced in 2010. In the same period, KCRC’s interest-bearing borrowings have decreased from a high of HK$23 billion in 2009 to HK$12.5 billion in 2013, and are expected to be fully paid off in the coming few years. The value of the Corporation’s net assets has remained above HK$55 billion since 2007.

Pamphlet
One Hundred Years of Railway Operations in Hong Kong

  • Video 1
    History of KCR up to Corporatization in 1982

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  • Video 2
    West Rail: From Ground breaking to Opening

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  • Video 3
    East Rail Extensions

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