CONFIDENTIAL
XCC(92)58
Present Position
7
Following a thorough review by NAPCO, assisted by the Government's Project Management Consultant, we now estimate that the overall cost of the ACP has risen by $13.6 billion from $98.6 billion to $112.2 billion. Within this estimate, the Government's direct costs (including both expenditure from the Capital Works Reserve Fund and equity injections) have remained at $59.3 billion. At the same time, we are able to quantify the appropriate level of the ACP contingency which is required over and above this sum to deal with possible delays and project interface problems. This is now estimated at $2.5 billion.
8
to -
The changes to the overall ACP estimates are mainly attributable
(a)
an increase in the estimate for the AR by $9.6 billion from $12.5 billion to $22.1 billion (reasons for which were set out in XCC(92)17, as well as in a separate paper, (XCC(92)56) in the present agenda);
(b)
an increase in the estimated cost of the airport itself by $2.7 billion; and
(c)
the net effect of justified increases and decreases in the estimates of individual ACP projects.
9
The equity injection into the MTRC for construction of the AR is smaller than originally estimated ($3 billion as compared with $3.8 billion). Equity for the PAA will be about the same as originally estimated. Against this, it will be necessary for Government to undertake to provide callable equity to the MTRC and the PAA as part of their financial support packages. These undertakings will give rise to contingent liabilities (about $7 billion in respect of the MTRC and $6 billion for the PAA). The Chinese Side were only recently informed of the MTRC callable equity, and Finance Committee have never been informed of either. These contingent liabilities are, of course, not expenditure: they are similar in concept to guarantees, but less onerous than guarantees both in terms of size and duration. It has proved necessary to explain the concept of contingent liabilities to the Chinese Side at length. Similar explanations will also be necessary for LegCo Members and the general public.