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XCS(73)12
given the fact that the Japanese Consortium have put forward a construction period of five years, an earlier completion date. Assuming they start work in June next year the first four stages would be completed by mid-1979;
(c) an examination of the financial terms for export
credit finance proposed by the three consortia indicate that there is, on balance, no great difference between them, although the Japanese terms are just slightly more favourable;
Their
(d) a major difference is that the Japanese Consortium
insist on a Hong Kong Government guarantee. argument for this is that, without a Government guarantee, the Hong Kong Government might be persuaded, for political reasons, to maintain a low fare structure because they would not be ultimately responsible for the debts of the MTR Corporation. A guarantee would force Government to ensure that sufficient revenue was collected from fares to repay the debt (but see the converse way of looking at this question in paragraph 21 below).
Possible Courses of Action
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Theoretically, apart from abandoning the project, there are four courses of action open to the Govenment, viz:
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(a) accept the Japanese Consortium's bid;
(b) accept one of the counter-bids;
(c) engage now in a competitive negotiation with two
or more consortia;
(d) return to the main sequence.
Of these courses of action it would appear that neither (b) nor (c) would be desirable at the present time. As regards (b) this course of action would almost certainly result in the ceiling price of the consortium chosen being little, if at all, below the present maxima they have indicated. These are both around $1,000 million above the Government's stated maximum
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