2
ill be progressively refined ag engineering and financial studies into airport development progress. As much as 70% of the costs could be financed by the private sector. On a debt : equity ratio of 3:1 we calculate that the airport will have a rate of return on equity of about 20%. This should make it attractive to private sector investors. The Airport Authority, a statutory body separate from Government, will have the responsibility for financing and developing the airport. It will also run the airport except for certain key functions such as air traffic control which will remain under Government control.
3.
The Port
(1)
Need for a site for port expansion
Once container Terrinals 8 and 9 on Stonecutters and Tsing Yi Islands have been completed, the best way to cope with forecast port traffic growth is to develop new facilities on Lantau Unlike the airport, these facilities will be developed
Island.
incrementally in response to demand.
(ii)
The
Cost and Financing of new port facilitios
estimated (1989) cost of full development is HK$50 billion. But, of this, 80% should be taken up by the private sector. There is no risk of over commitment on the Government's part because if the dezand is not there, the facilities can_pot be expanded : if the demand is there, they will be privately financed, built and operated as all Container Terminals in Hong Kong have been SO far. They have been commercially very successful. Many back up facilities (e.g. container lorry parking and stacking) are also provided by the private sector. This would continue to be so in any new facilities. Government would, however, need to provide for certain elements such as break-waters, typhoon shelters, dredging and navigational aide
These could rcquire a tulal expenditure of about HK$10 billion.
CONFIDENTIAL
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