After consideration, the company was informed that the net premium to be recommended would allow for the deduction of the costs of the lowest tender plus half the difference between the lowest and the second lowest tenders, subject to Government having the opportunity to ensure that all the items included in the tender may be appropriately deducted. In the meantime, the company awarded a contract to the lowest tenderer.
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On the basis of the formula proposed above the total deduction will be between $185 and $210 million depending on a further detailed examination of the relevance of certain items. The formed site value has been assessed by Government at $407 million but this has been queried by the company. Assuming that the formed value is agreed, the net premium will be somewhere between $200 million and $225 million. A further charge on the basis of 75% of the unformed site value will be applied to the pier lease in accordance with approved Government policy.
Work to be executed on behalf of the Government
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The Government is currently finalising arrangements with the Company for a number of items of work to be carried out by the Company on behalf of the Government because, although part of the infrastructure of the New Town, they have to be advanced to tie in with the development of the power station. These include, for example, the construction of a service reservoir nearby and landscaping treatment to the access road to the site. These items have not been included in the contract awarded by the Company and it will be necessary to ensure that these works are carried out through the lease conditions. The costs involved will be borne by the Government, but as the designs of the works involved have not been completed and the costs remain unknown, it will not be possible to arrange for payment through a reduction in the premium. Direct payment will have to be made by the Government to Kowloon Electricity Supply Company Limited. Funds will be made available through the Public Works Programme, and steps are being taken to secure the necessary approvals.
Basic Terms
The following basic terms are proposed:
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Lease term
:
Residual of a term of 99 years less the last three days thereof com- mencing from 1st July 1898.
CONFIDENTIAL #