CONFIDENTIAL
0172 3
MDHOAN 1 5
TRANSLATE INTO IN JANUARY 1992 PRICES
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THE SAME BASIS AS THOSE FOR THE AIRPORT RAILWAY. THIS WOULD GIVE US A BETTER PICTURE OF THE SIGNIFICANCE OF THE INCREASED RESERVE POSITION NOW, AS AGAINST THAT FORESEEN IN MARCH 1991.
5. WE NOTE THAT ALL OF THE COST INCREASES SINCE JULY 1991 HAVE FALLEN ON THE PRIVATE SECTOR, WITH HKG FUNDING REMAINING ESSENTIALLY THE SAME BUT WITH HIGHER CONTINGENT LIABILITIES. THIS HAS OCCURED AT A TIME WHEN THERE IS AT LEAST SOME EVIDENCE THAT THE PRIVATE SECTOR APPEARS TO BE LESS WILLING TO CARRY THESE RISKS WITHOUT ADDITIONAL GUARANTEES.
HAS THIS BEEN AN AREA OF CONCERN IN YOUR CALCULATIONS?
6.
INTEREST.
WE NOTE THAT YOU HAVE EXCLUDED FINANCING COSTS AND HOW ARE THESE LIKELY TO AFFECT THE AIRPORT AUTHORITY AND THE ESTIMATE FOR THE AIRPORT (PARA 7(B) OF THE PAPER)??
7. WHILE THE CHINESE MAY BE RELIEVED THAT THE OVER ALL COST TO THE HONG KONG GOVERNMENT HAS NOT INCREASED OVER THAT INDICATED
TO THEM IN THE OPTIONS PAPER OF FEBRUARY 1991, WE EXPECT THAT THEY WILL LIGHT UPON THE FACT THAT HK DOLLARS 5.9 BILLION WILL NOW BE IN THE FORM OF
CALLABLE CAPITAL, RATHER THAN HONG KONG GOVERNMENT EQUITY INJECTION. THEY MAY VIEW THIS AS FURTHER EVIDENCE OF HKG TRYING TO SHIFT THE FINANCIAL BURDEN TO THE SARG POST-1997. WE REALISE THAT THERE IS A GOOD CASE FOR THIS AS THE MOST COST EFFECTIVE WAY OF MANAGING THE PROJECT. IT WOULD HOWEVER BE USEFUL TO KNOW YOUR PRESENT THINKING ON HOW THE AIRPORT AUTHORITY WILL BE ABLE TO REASSURE EXPORT CREDIT AGENCIES WHO ARE LOOKING FOR FIRMER GUARANTEES THAN ARE AT PRESENT AVAILABLE. DO YOUR PROJECTIONS TAKE INTO ACCOUNT THAT HKG COULD NEED TO GUARANTEE THE FINANCING OF CERTAIN MAJOR ASPECTS OF THE AIRPORT FOR EXAMPLE THE AIRPORT PLATFORM?
HURD
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YYYY
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