XN000022-1976-02-11 — Page 18

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WEDNESDAY, FEBRUARY 11, 1976

MTR. CEILING OF LOAN GUARANTEE INCREASED

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THE LEGISLATIVE COUNCIL TODAY ADOPTED A MOTION RAISING TO $470 MILLION THE CEILING OF A GOVERNMENT GUARANTEE FOR A LOAN OF $420 MILLION TO FINANCE LOCAL CONTRACTS OF THE MASS TRANSIT RAILWAY PROJECT.

IN MOVING THE MOTION, THE FINANCIAL SECRETARY, THE HON. PHILIP HADDON-CAVE, EMPHASISED THAT THE INCREASED GUARANTEE REQUESTED DID NOT IN ANY WAY REPRESENT AN INCREASE IN THE ESTIMATED COST, EITHER OF THIS ONE CONTRACT OR OF THE MASS TRANSIT PROJECT AS A WHOLE.

+ IT SIMPLY MEANS, HE SAID, THAT THE MASS TRANSIT RAILWAY CORPORATION IS CONTINUING ITS POLICY OF FINANCING LOCAL CONTRACTS, WHENEVER POSSIBLE, BY LOCAL BORROWING IN HONG KONG DOLLARS.+

THE FINANCIAL SECRETARY RECALLED THAT ON OCTOBER 23 LAST YEAR HE WAS AUTHORISED BY A RESOLUTION OF THE COUNCIL TO GRANT CERTA IN GUARANTEES IN RESPECT OF THE REPAYMENT OF LOANS AND OTHER

INDEBTEDNESS INCURRED BY THE MTR CORPORATION.

SINCE THEN, HE SAID, THE CORPORATION HAD LET ELEVEN OUT OF A TOTAL OF 25 CIVIL ENGINEERING CONTRACTS FOR THE CONSTRUCTION OF THE MODIFIED INITIAL SYSTEM.

ON OCTOBER 22 HE TOLD THE COUNCIL THAT THE TOTAL SUM HE WAS SEEKING AUTHORITY TO GUARANTEE WAS CONSIDERABLY GREATER THAN THE SUM OF THE INDIVIDUAL CONTRACT PRICES WHICH WOULD EVENTUALLY BE ACCEPTED BY THE CORPORATION AFTER COMPLETION OF THE TENDER PROCEDURE.

HE EXPLAINED THEN THIS WAS BECAUSE IT WAS NOT YET KNOWN WHICH FIRMS FROM WHICH COUNTRIES WOULD ACTUALLY BE AWARDED CONTRACTS.

AMONG THE GUARANTEES AUTHORISED AT THAT TIME WAS ONE FOR A LOAN OF HK$420 MILLION TO FINANCE LOCAL CONTRACTS.

+LOCAL CONTRACTS TO APPROXIMATELY THAT SUM HAVE NOW BEEN LET AND IN ORDER TO FINANCE TWO FURTHER LOCAL CONTRACTS FOR THE CONSTRUCTION OF KOWLOON. BAY STATION AND LINE SECTION AND A UTILITIES JETTY AT TSIM SHA TSUI, A FURTHER GUARANTEE WILL BE NEEDED FOR AN ADDITIONAL LOAN OF HK$50 MILLION, HE SAID.

MR. HADDON-CAVE GAVE A WARNING THAT ON MARCH 1, THE CORPORATION INTENDED TO LET A FURTHER SEVEN INTERNATIONAL CIVIL ENGINEERING CONTRACTS AND THAT PRESENT INDICATIONS ARE THAT AT THAT STAGE IT WOULD ALMOST CERTAINLY BE NECESSARY FURTHER TO AMEND THE SCHEDULE TO THE COUNCIL'S RESOLUTION OF OCTOBER 23, 1975 IN RESPECT OF INCREASED GUARANTEE REQUIREMENTS FOR SUPPLIER CREDIT ARRANGEMENTS,

/HE WOULD