C.S, 166
CONFIDENTIAL # #
XCC(77)54
(b)
(c)
(d)
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(g)
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1.8 million passengers a day would use the MIS/ Tsuen Wan extension in 1986;
the fare structure for the MIS/Tsuen Wan extension would range from $1 to $2.50 (1975 prices) and be increased by an average of 7% a year, equal to the Corporation's assumed rate of inflation. In addition, the Corporation has assumed a 3% real growth in revenue throughout the 1980's;
some reshaping of bus and PLB services would be necessary to fit in with the extended MTR system;
of the total escalated construction cost, about 50% would be met from export credit finance, at interest rates of 8-8%. The Corporation envisages Hong Kong dollar denominated bonds as one possible source for the balance of the finance, supplemented by medium term borrowings, including some standby facilities, from the banks or their equivalent, at interest rates of 84% -9%;
the Government would be prepared to invest a further $500 million in cash and about $170 million in the from of a Crown Land premium for the Railway portion of an additional depot at Kwai Chung and some $11 million in respect of rates, and also to accept an increase in the Corporation's maximum outstanding debt to a ceiling of approximately $9,800 million in 1982. This would increase the Government's con- tingent liabilities, to the extent that Government guarantees were required for the increased debt. The Corporation has assumed that the Government would contribute equity, apart from that for Crown Land premia and rates, of $23 million in 1977, $97 million in 1978 and $380 million in 1979. The maximum increase in the Government's contingent liabilities for the MIS and Tsuen Wan extension combined would be $4,200 million by 1982, but the Corporation estimates that less than 50% of this amount would need to be covered by Government guarantees;
the Corporation would not have to pay rates in cash. until it had a positive cash flow prior to loan repay- ments.
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