XN000022-1972-06-07 — Page 4

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Wednesday, June 7, 1972

"If it is favourable, every effort will be made to start construction

early in 1974. If it is not favourable, either because the finance is not

available in sufficient quantities and on appropriate terms or because the

cost turns out to be inordinately high or both, all work on the project will

cease and it will not be proceeded with further".

The Financial Secretary said the Government in taking a firm decision,

in principle, to proceed with the mass transit railway was conscious of the

size of the task, in physical as well as financial terms, it had set itself.

The complete system would take many years to build, though the first

stage would be operational within 3 years from the time construction begins

and the second stage 15 months later.

System

On the basis of mid-1970 prices, the system was estimated to cost

$6,000 million, including accumulated interest over the construction period,

or just over $5,000 million after ploughing back the revenue earned after

the opening of the early stages.

Mr. Haddon-Cave pointed out, however, that construction costs were

rising and could be expected to rise further. He said: "It is bound to be

higher and, indeed, according to our calculations, the net capital requirement

could be considerably higher than this depending on the assumptions made as

regards cost escalation and hence of average costs over the whole construction

period,"

The Financial Secretary said the Government believed that a substantial

sun of public money could be committed to assist in financing the project,

that the system could be constru, sed without undue disruption, and that the

system was economically viable,

/He said