The MTR Hong Kong station in Central. Bloomberg

HONG KONG: The city's subway operator, MTR Corporation, has won a HK$20 billion contract to operate Sweden's Stockholm Metro for eight years beginning in November, the company said in a statement released yesterday.

The eight-year concession includes train and station operations, as well as servicing, maintenance and cleaning of trains. The contract also includes an optional six-year extension.

"MTR submitted the best bid, from a quality standpoint, and that was decisive in this procurement," Stockholm Public Transport Managing Director Ingemar Ziegler said.

Under the agreement, Stockholm Public Transport will pay MTR a fixed price of around HK$2.28 billion per year, plus up to HK$135 million in financial incentives for traffic operations, cleaning, punctuality and customer satisfaction.

"We are delighted that Stockholm Public Transport has chosen the MTR from out of six international bidders to do this job," MTR Corporation Finance and Business Development Director Lincoln Leong said in yesterday's statement.

"The awarding of this contract is an international recognition of MTR's ability to deliver highly reliable train services with excellent customer service," Leong added.

MTR has been operating the London Overground railway service in a joint venture with Germany's Deutsche Bahn since November 2007. The contract will last for seven years, with an optional two-year extension.

"We have a good track record with London Overground in delivering improved services," said Jeremy Long, chief executive officer of MTR Corporation's European business.

MTR also signed an agreement with the Hangzhou city government last week for constructing a mass transit rail line. MTR, taking a 49 percent stake in a joint venture with Hangzhou Metro Group, will invest 22 billion yuan in the project.

Head of equity markets at Delta Asia Financial Conita Hung said MTR's contract with Stockholm Metro may only slightly improve the company's revenue this year.

"The majority of MTR's income is generated in Hong Kong, especially from its railway construction and property rental," Hung said. "The new concession is only one of its projects."

Shares of MTR ended yesterday at HK$17.64, down 0.56 percent, or HK$0.10, while the benchmark Hang Seng Index tumbled 2.9 percent, or 376.14 points, to close at 12,583.63.

The MTR Corporation announced yesterday it had secured an eight-year contract worth HK$20 billion to operate Sweden's Stockholm Metro (right), also known as SL - Storstockholms Lokaltrafik - which is considered one of the best designed subway networks in the world.File photo

(HK Edition 01/22/2009 page16)