FRIDAY, JUNE 25, 1993
THE CONSTRUCTION COST OF THE CROSSING WAS EXPECTED TO BE ABOUT $6 BILLION IN MONEY OF THE DAY, WHICH WAS BELOW THE GOVERNMENT'S ORIGINAL ESTIMATE OF $6.5 BILLION.
THE TOTAL COST TO THE FRANCHISEE, INCLUDING FINANCING CHARGES AND OTHER COSTS, WAS ESTIMATED TO BE $7.5 BILLION. THESE FIGURES INCLUDED THE COST OF ASSOCIATED APPROACH ROADS AND NOISE MITIGATION MEASURES ALONG CONNAUGHT ROAD WEST.
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GIVEN THE $7.5 BILLION TOTAL ESTIMATED COST, THE TOLL PACKAGE IS REASONABLE AND AFFORDABLE WITH $30 FOR CARS IN 1997 PRICES WHICH IS EQUIVALENT TO $20 IN TODAY'S PRICES, AND $55 FOR BUSES WHICH IS $39 IN TODAY'S PRICES, SAID MR YEUNG.
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DOUBLE-DECKED
"FIXING THE TOLLS AT LOWER LEVELS WOULD NOT
BE ACCEPTABLE ΤΟ INVESTORS AND BANKERS BECAUSE IT WOULD AFFECT THE ABILITY OF THE FRANCHISEE TO REPAY DEBT DURING THE CRUCIAL INITIAL YEARS.
"MOTORISTS WILL OF COURSE HAVE THE CHOICE OF USING THE TWO EXISTING TUNNELS, PROBABLY AT LOWER TOLLS".
"THE FRANCHISEE WILL HAVE NO MORE THAN A RETURN WITH AN AVERAGE OF 16.5% RETURN ON EQUITY OVER THE 30-YEAR FRANCHISE.
REASONABLE RATE OF (IN NOMINAL TERMS)
*THIS IS EXTREMELY REASONABLE WHEN COMPARED WITH RETURNS OF 20% TO 25% ON OTHER MAJOR ROT INFRASTRUCTURE PROJECTS IN THE REGION. AT THE END OF THE 30 YEARS, THE CROSSING WILL REVERT TO THE GOVERNMENT, SAID MR YEUNG.
A SPOKESMAN SAID A NEW TOLL ADJUSTMENT FORMULA WAS BEING USED BECAUSE FORMULAE USED EARLIER ARE NO LONGER ACCEPTABLE TO INVESTORS AND LENDERS.
THE FORMULA ON THE WESTERN HARBOUR CROSSING IS BASED ON A SIMPLE FLOOR AND CEILING CONCEPT, UNDER WHICH PROFITS ARE CAPPED AND THE FRANCHISEE ALSO TAKES THE RISK THAT IT MIGHT EARN LESS THAN IT EXPECTS.
THE FRANCHISEE WILL BE ALLOWED THROUGH TOLL INCREASES SO THAT IT WILL THE FLOOR BUT BELOW THE CEILING.
THE FLOOR REFERS TO REVENUES RATE OF RETURN (IRR), WHILE THE CORRESPONDING TO 18%.
TO EARN SUFFICIENT REVENUES ALWAYS ENJOY REVENUES ABOVE
CEILING REFERS
CORRESPONDING ΤΟ 15% INTERNAL TO REVENUES
HALF THE EXCESS REVENUES BETWEEN 18% AND 19%, AND ALL THE THE REVENUES ABOVE 19%, GO INTO A TOLL STABILITY FUND ADMINISTERED BY GOVERNMENT AND USED TO OFFSET TOLL INCREASES.
COST
THE ARRANGEMENTS ARE BACKED UP BY A 48-MONTH COMPLETION GUARANTEE, AND A COST-OVERRUN GUARANTEE WHICH ENSURES THAT ANY OVER-RUNS WILL BE PAID FOR BY THE FRANCHISEE, NOT THE GOVERNMENT.
THERE WILL BE NO GOVERNMENT GUARANTEES TO THE FRANCHISEE.
/THE SPOKESMAN