12
40.
It is considered essential that this undertaking be given by Government. Cashflow analysis indicates that even in circumstances of a lengthy project delay, it is unlikely that this undertaking would result in additional funding being needed from Government. Nevertheless, the undertaking, creates a potential contingent liability for the Government of the Special Administrative Region in the event of extremely adverse circumstances in which all the available resources (which are considerable) proved to be inadequate to enable the AA to service its debt.
Directions from Government
41.
The draft agreement provides that the Government will undertake to make good any shortfall in debt service payments on project initial debt caused by -
42.
a) the imposition of a profit control scheme on the
AA or other limitations on its revenues;
b)
c)
d)
any Government directions given to the AA under powers in the AA Ordinance;
imposition of any tax specifically directed at the AA or the airport; or
any change in project scope necessitated by any new policy directed specifically at the AA.
It should be noted that the draft agreement does not seek
to prevent Government from taking any of the actions listed; it simply creates an obligation to make up any shortfall in debt service payment which might be directly attributable to such actions. This provision would not apply to Government measures which had a more general application (e.g. tax measures) while also affecting the AA.
Airport Charges
43.
If. on the opening of the airport, the AA is prevented from imposing aeronautical charges at the level proposed or from imposing a PTC up to $100 (in March 1991 prices) because of any international obligation or as the result of any arbitration decision precluding it, the Government will make good any shortfall in debt service payments which result.