Having regard to the above analysis it is proposed that the Wharf Company's proposals for a modernised tramway service outlined in paragraph 4 above should not be accepted. As the Company has stated that it is not prepared in such circumstances to continue to run the present trams for any length of time, therefore, and as it is considered necessary to maintain the service at least until the MTR Island Line opens in Mid-1985, it is proposed that negotiations should be opened with the Company for the Government to take over the trams. This would involve, inter alia, an exchange of the Sharp Street depot for the Canton Road/South Camber site on the condition that the Company constructs. a terminal for China passenger services within its development and hands this back to the Government, with premium being adjusted accordingly. It is further proposed that the MTRC be invited to run the tram service until its expiry, on conditions to be arranged with the Government and that, as it requires to construct a concourse for Causeway Bay station within the Sharp Street depot site while continuing to run the trams from the depot, the Corporation should be granted the site, at a suitable premium, for further development above.
Financial Implications
25
The cost of acquiring the tramway assets, other than the depot site at Sharp Street, would be relatively small (say about $10 million), given that they are mostly old and have been largely written down in value. It should be possible also to write this cost off, together with any additional costs for maintenance of cars, track and electrical systems, from revenue received during the remaining life of the system. The estimated value of the Sharp Street depot site is about $1,600 million and of the South Camber site, after allowing for the provision of Government facilities as at present required, is about $1,200 million ($3, 300 million if sold wholly unencumbered). Very roughly, therefore, if the Government were required to pay $400 million net to the Wharf Company it could receive $1,600 million in cash from the MTRC for a private treaty grant of the Sharp Street site at FMV, that is $1, 200 million net in cash, plus the Government facilities on the South Camber site valued at about $2, 100 million, including land. It should be noted that this latter figure is a charge for the China terminal which would need to be met in any case regardless of the means used to finance it. In addition, if the premium received: from the MTRC
for the Sharp Street site proved to be less than the negotiated value paid to the Wharf Company, then the Government's net cash receipts would be less by that amount.
G.S. 166
CONFIDENTIAL