29.
The Hong Kong Government estimate the cost of the new
airport, including the associated road and rail links, to be
HK$112.2 bn (£10.0 bn) at March 1991 prices. They intend that some 50% of the cost will be met by the private sector.
30.
During 1989 and 1990 it became clear that the private sector wanted to see firm support from China for the project before they would commit substantial funds whose repayment period would extend well beyond 1997. After protracted discussions, the British and Chinese Prime Ministers signed a Memorandum of Understanding in Peking in September 1991.
The Memorandum of Understanding (MOU)
31. The key points of the MOU are that China undertook to support the construction of the new airport; adopt a positive attitude to necessary and reasonable borrowing by the Hong Kong Government; and indicate to potential investors that contracts
will be honoured after 1997. The Hong Kong Government undertook
to complete as many as possible of the airport core projects before 30 June 1997; to consult the Chinese side on borrowing of over HK$5 bn with maturities after 1997; and to plan their finances with the firm objective of leaving not less than HK$25 billion in their fiscal reserves in 1997.
32. To facilitate cooperation, the MOU established an Airport Committee under the Sino-British Joint Liaison Group to act as the forum for consultation on the granting of major airport contracts and franchises. The MOU was acclaimed, both in Hong Kong and internationally, as a good and workable arrangement and gave a major boost to confidence. Since then, the Hong Kong Government have briefed the Committee extensively on the progress of the project, and have put forward two alternative financing packages for the Airport Authority and the Mass Transit Railway Corporation (which will build the Airport Railway). Despite intensive
select.cttee.PR.JRB
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