For decision on
CONFDENTIA
24 March 1992
XCC(92)57
Copy No. 32
MEMORANDUM FOR EXECUTIVE COUNCIL
NEW AIRPORT: FUNDING ARRANGEMENTS
THE PROBLEM
Since February this year, the Government and the management of the Provisional Airport Authority (PAA) have been negotiating an agreement outlining the terms for Government funding and other support for the airport project. It is necessary to agree the main principles of this agreement and the level of Government funding to be provided to support the project before consulting the Chinese side at the Airport Committee and seeking the approval of Finance Committee for the levels of Government equity required.
RECOMMENDATION AND ADVICE SOUGHT
2
It is recommended that the Government should support the PAA/ Airport Authority (AA) in the financing and development of the new airport by -
a)
b)
c)
providing a total paid-up equity of $16.6 billion at nominal prices ($13.6 billion in March 1991 prices) to be covered in part by the conversion to equity of all previous advances of Government funds to the PAA;
providing up to a further $8.5 billion at nominal prices ($5.9 billion in March 1991 prices) of equity to be drawn down by the AA only in certain defined adverse circumstances;
foregoing dividends for as long as the lenders of the initial project debt may reasonably require;
Executive Council