CONFIDENTIAL
CONFIDENTIAL
FM HONG KONG
TO DESKBY 201130Z FCO TELNO 854
OF 201036Z MARCH 92
011700
MDADAN 2278
ADVANCE COPY Garn (mit attachment)
INFO IMMEDIATE PEKING, UKREP JLG HONG KONG
FINANCIAL ASPECTS OF THE AIRPORT CORE PROGRAMME
Copy
1
Mr Burns
Mr Broadbent,
Elan Adv
Mr Stone
1. WE ARE FAXING TO YOU AND COPY ADDRESSEES A PAPER ON THE Myself
8 Pide
FINANCIAL ASPECTS OF THE AIRPORT CORE PROGRAMME THAT WILL BE PUT
TO EXCO ON 24 MARCH. NEGOTIATIONS ON THE AIRPORT FIGURES HAVE
CONTINUED UNTIL TODAY. WE APOLOGISE THAT IT HAS NOT BEEN POSSIBLE-
TO SEND IT TO YOU EARLIER. WE WOULD OF COURSE WELCOME ANY
COMMENTS YOU MAY HAVE.
2. THE PAPER COMPARES OUR PRESENT ESTIMATE OF THE ACP COSTS WITH
THOSE GIVEN TO FINANCE COMMITTEE IN JULY 1991. COSTS ARE ALL AT MARCH 1991 PRICES. EXCLUDING THE OVERALL ACP CONTINGENCY OF HK DOLLARS 2.5 BILLION (SINCE NO CONTINGENCY FIGURE WAS GIVEN TO
LEGCO IN JULY 1991, ALTHOUGH IT WAS CLEARLY STATED THAT SUCH A CONTINGENCY WOULD BE NECESSARY), THE MAIN CONCLUSION OF THE PAPER IS THAT THE COST TO GOVERNMENT IN THE FORM OF CAPITAL EXPENDITURE AND EQUITY INVESTMENT REMAINS AT HK DOLLARS 59.3 BILLION.
3. THE PAPERS MAKES CLEAR THAT, IN ADDITION TO THE COSTS DESCRIBED ABOVE, IT IS ENVISAGED THAT THERE WOULD BE MAXIMUM CONTINGENT LIABILITIES OF HK DOLLARS 5.9 BILLION IN RESPECT OF THE AIRPORT AUTHORITY AND ABOUT HK DOLLARS 7 BILLION IN RESPECT OF THE AIRPORT RAILWAY. THE POINT IS MADE THAT THE UNDERTAKING OF
SUCH CONTINGENT LIABILITIES IS A MORE COST EFFECTIVE MEANS OF SUPPORTING THE CORPORATIONS IN THE CONSTRUCTION, FINANCE AND OPERATION OF THESE PROJECTS THAN DIRECT GOVERNMENT EXPENDITURE IN
FULL OR GOVERNMENT GUARANTEE ON THE TOTAL AMOUNTS OF THEIR LOANS FOR THE FULL LOAN PERIOD.
4. IF EXCO APPROVES THE PAPER, UKREP JLG PLAN TO HAND IT TO THE CHINESE SIDE OF THE AIRPORT COMMITTEE. IN DOING SO, THEY WOULD MAKE CLEAR THAT WE PLAN TO PROVIDE THE PAPER TO FINANCE COMMITTEE, THE AIRPORT CONSULTATIVE COMMITTEE AND THE PUBLIC A FEW DAYS LATER. THIS WOULD RESPOND TO THE CONSTANT CHINESE REQUESTS TO US TO ENSURE MAXIMUM TRANSPARENCY. UNLESS GUO OBJECTED, WE WOULD THEN ISSUE THE PAPER AFTER AN INTERVAL OF A
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