The Executive Council has approved new funding arrangements for building the Mass Transit Railway West Island Line, with the government capital grant lifted to $12.7 billion.

The Transport & Housing Bureau said today the project is not financially viable based on fare revenue alone. The higher level of government support - increased from $6 billion originally on January 2006 prices - reflects mainly price hikes and a rise in the works' scope.

Price increases account for $4.3 billion of the rise in building costs, up 48% on the original 2007 project estimate. Due to further detailed planning, the project scope, including construction methods and extra works for compliance with detailed statutory requirements, has been changed, leading to a $2 billion higher estimate.

Improvements to community facilities will cost another $200 million. They include reprovisioning the David Trench Rehabilitation Centre to the ex-Upper Level Police Station with expanded services by adding a new wing and preserving the facade and other heritage features, and relocating Kennedy Town swimming pool to meet the latest design and maintenance standards.

To ensure the support is reasonable, the bureau said a claw-back mechanism will be established with a reassessment to be made based on the actual construction prices within two years of the line's launch.

The MTR Corporation will return any excess money to the Government with interest, or bear any shortfall. The funding proposal will be submitted to the Legislative Council for approval, after which construction will start if granted.

The project will create 3,000 jobs during the construction period until 2014, and another 2,500 jobs during its operation.

The project will involve extending the existing MTR Island Line from Sheung Wan to Kennedy Town, with two intermediate stations at Sai Ying Pun and the University of Hong Kong. It will allow commuters to reach Sheung Wan from Kennedy Town in eight minutes, compared with up to 25 minutes by road transport.