On the right track: Chief Secretary Donald Tsang witnesses the signing of an agreement in principle for the construction of Phase 2 of Line 4 of the proposed Shenzhen Metro System and the operation of Line 4.

The MTRC and Shenzhen Municipal Government have entered into an agreement in principle for the construction of Phase 2 of Line 4 of the proposed Shenzhen Metro System and the operation of Line 4 for a 30-year term.

The agreement states that a project company to be established by the MTRC on the Mainland will have the right to construct Phase 2 of Line 4 and to operate Line 4, and the right to use the facilities of Phase 1 of Line 4.

The total investment of the project company will be approximately 6 billion yuan with a registered capital of about 2.4 billion yuan.

Speaking at the signing ceremony today, Chief Secretary for Administration Donald Tsang said the investment is a milestone in Hong Kong-Shenzhen co-operation.

After the implementation of CEPA, there has been a great increase in passenger and goods flow between the two cities, Mr Tsang said, adding that the construction of the line will further enhance the two jurisdictions' connectivity.

MTRC Chairman Dr Raymond Ch'ien said urban railways are essential elements of any infrastructure expansion to support economic growth of fast-growing cities like Shenzhen.

Line 4 is a 21km double-track urban railway running from Huanggang to Longhua New Town with 14 stations.

The line will form the major north-south railway corridor linking Hong Kong to the Mainland via Shenzhen.

Phase 1 of Line 4, a 4.5km section between Huanggang and Shouniangong, is already under construction by Shenzhen Metro Company and it will initially operate the line.

From Line 4's launch date, expected to be near the end of 2008, the entire line will be operated by the MTR's Project Company.

Upon the signing of the agreement in principle, the MTR will undertake the project design and the preliminary construction works of Phase 2.