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5. ON THE PAPER ITSELF (PARA 4 OF TUR), THE FACT THAT THE COST TO GOVERNMENT HAS NOT INCREASED, DESPITE A DOLLARS 13.6 BILLION INCREASE IN THE OVERALL COST, IS DUE TO -
(A)
DOLLARS 9.7 BILLION OF THE INCREASE BEING ON PROJECTS WITH PRIVATE SECTOR FUNDING, WITH ONLY DOLLARS 3.9 BILLION ON GOVERNMENT FUNDED PORTION:
(B)
(I)
AND
OF THE LATTER, DOLLARS 1 BILLION BEING OFFSET BY SAVINGS IN GOVERNMENT EQUITY CONTRIBUTION TO THE CORPORATIONS:
6.
(II)
DOLLARS 2.9 BILLION OF GOVERNMENT CAPITAL COST BEING
REIMBURSED BY MTRC.
THE RESERVE POSITION PROJECTED IN THE LATEST MEDIUM RANGE FORECAST, WHICH WAS PUBLISHED WITH THE BUDGET, HAS ALREADY TAKEN INTO ACCOUNT THE COST OF THE ACP TO THE GOVERNMENT. IT SHOULD B NOTED THAT THE RESERVE FIGURES ARE EXPRESSED IN MONEY OF THE DAY PRICES.
7. LENDERS ARE NATURALLY LOOKING FOR CLEAR SIGNS OF HKG SUPPORT OF ITS TWO CORPORATIONS IN ITS CAPACITY AS SOLE SHAREHOLDER (YOUR PARA 5). OUR POLICY IS NOT TO GUARANTEE THE <PA4'S DEBT. THE PAA IS NOT YET IN A POSITION TO DEMONSTRATE HOW HKG WILL SUPPORT IT, AND THIS HAD LED MOST LENDERS AND ECAS TO ASSUME, FOR THE TIME BEING, THAT A FULL GOVERNMENT GUARANTEE WILL BE FORTHCOMING. WE HAVE HAD INDICATIONS THAT ONCE THE FULL GOVERNMENT SUPPORT PACKAGE FOR THE PAA IS KNOWN AND UNDERSTOOD, PAA WILL BE ABLE TO SECURE LOANS ON A PROJECT FINANCE BASIS WITHOUT THE NEED FOR GUARANTEES. INDICATIONS FROM CONSORTIA
INTERESTED IN THE ACP PROJECTS ARE THAT EXPORT CREDIT AGENCIES WILL BE MORE READY TO ACCEPT PROJECT RISK THAN HAS BEEN CUSTOMARY HERETOFORE. THE PAA'S FINANCING PLAN DOES NOT, HOWEVER, PUT TOO HEAVY A RELIANCE ON EXPORT CREDIT.
8.
WHILE FINANCING COSTS AND INTERESTS HAVE NOT BEEN
INCLUDED
IN THE OVERALL COST PAPER (YOUR PARA 6), THEY HAVE BEEN FULLY TAKEN INTO ACCOUNT IN FORMULATING THE FINANCIAL ARRANGEMENTS FOR THE CORPORATIONS. RISKS OF HIGHER INTEREST RATES ARE ALSO COVERED
IN THE DOWNSIDE CASES.
9.
WE ARE NOT YET IN A POSITION TO DISCUSS THE OUTCOME OF THE
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