The Hong Kong Government, after detailed consideration of
these proposals and of the future "movement problem" in general,
decided in principle in April 1972 to proceed with the construction
of the mass transit railway, subject to satisfactory arrangements
being made for financing the project. This decision in principle
was reaffirmed in February 1973, when the Hong Kong Government also
decided firmly to proceed as soon as possible with constructing
the first four of the nine stages of the railway. (The first four
stages were reckoned to be the minimum system which could be
operated on a commercially viable basis: further stages beyond
stage 4 would be extensions to the basic system).
It is difficult, if not impossible, accurately to estimate
the total capital expenditure on the full system. For the first
four stages alone, the cost of construction and equipment is -
currently estimated at between Hong Kong dollars 5,600 and 6,000 million (about pounds sterling 470-500 million) spread over five to six years.
The substantial amount of capital involved is expected to be
met largely (about 60 per cent) from export credits of the ECGD
type. Another 15-20 per cent would be met from an equity
contribution from the Hong Kong Government, and the balance would
be raised from a mixture of market sources (e.g. bank loans,
Eurobonds, etc.). Apart from the Hong Kong Government's equity
contribution, the capital expenditure is expected to be repaid
entirely from the fare and other revenue (e.g. revenue from
advertising)/generated by the system.
A Hong Kong Government Steering Group is currently in
consultation with a number of groups interested in building the
railway with a view to negotiating a turnkey contract with one of
them for the complete construction and equipment of the first four
stages. The final selection of the successful group will be made
by the Governor in Council.