XN000022-1972-06-07 — Page 8

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Wednesday, June 7, 1972

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But 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 oost escalation and hence of average costs

over the whole construction period (and we can do no more than make certain

assumptions until tenders are invited and contracts let). The net capital

requirement will be less than total capital expenditure, including interest

on the accumulated debt, because revenue from fares on the initial stages, as

they are opened, will start to flow in from early 1977 onwards and these will

provide some offset from that year on.

Financing Problem

"The financing problem is closely linked with two other problems

namely, (1) the form of tendering and the letting of contracts and (2) the

most appropriate operational arrangements, These issues will have to be looked

at separately but, eventually, they will need to be brought together in a

coherent scheme for the financing, construction and operation of the system.

"To work out the best methods of resolving these three problems with a

view to assembling a package on the basis of which a final decision can be

taken whether or not to go ahead that is to say, whether it is possible to go

ahead a small Steering Group has been established under my chairmanship. This

Group will go fully into all the possibilities of financing, constructing and

operating the Mass Transit Railway, including consultations with financial

interests and groups of construction companies and manufacturers of equipment

which may come forward with ideas. It has already held its first meeting and is

under direction to complete its work and to present its findings to Executive

Council within six months. The Steering Group will be greatly assisted by the

assi

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