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3
to the opening of the airport. In July 1991, when this cost was estimated, fundamental planning and engineering decisions had yet to be taken. The Master Plan, on which the Chinese side has already been briefed, has now been completed. Based on the finalized plan and the results of now completed site investigation studies, the current estimate of capital cost has been refined to $46.3 billion (at March 1991 prices). A breakdown of this cost and a comparison with the cost announced in July 1991 are at Annex A.
10.
The allocation of capital costs between the AA, Government and the private sector reflects the PAA's business strategy of maximising private sector investment in all major support facilities at the airport (e.g. air cargo, aircraft maintenance, aircraft fuelling and aircraft catering facilities). It also takes account of Government's decision to retain responsibility for a range of functions at the airport (e.g. air traffic control, air mail centre, police and general fire services facilities). Of the $46.3 billion total estimated capital cost of the airport, only $33.7 billion will need to be funded by the AA itself (Government will fund directly the $3.1 billion costs of Government facilities at the airport and the private sector is expected to invest about $9.5 billion in support facilities). The objective of the financing strategy is, to finance, through a combination of Government equity and borrowings, this estimated $33.7 billion cost.
11.
All of these estimates are subject to further refinement.
The AA's costs include an average 17.5% contingency element.
The estimate of $9.5 billion for tenant support facilities (i.e. air cargo and aircraft maintenance facilities etc.) is very approximate. Since these facilities will be funded by private sector investors the ultimate cost of these facilities will depend on their commercial judgement. It is not proposed, therefore, to further refine or monitor these costs since they have no impact on the costs of the Government or the AA. The costs will become firmer only once bids are received from the private sector for the concessions concerned.
Operating Costs
12.
These were estimated jointly by the PAA's Master Plan consultants and the Government's Civil Aviation Department, drawing on experience at Kai Tak airport and on experience elsewhere in the world in the operation of airports similar in nature to Chek Lap Kok. It should be noted that the AA will be required to reimburse the Government for the full cost of air traffic control and meteorological services which the Government will provide.