XN000022-1992-04-01 — Page 47

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WEDNESDAY, APRIL 1, 1992

The planned financial arrangements for new Airport and

the Airport Railway are based on a Government equity investment of $13.6bn into the Airport Authority and $3bn

into the MTRC.

The government will also provide support in other ways,

for example by following past practice of granting land to the MTRC at full market value so that profits from property development can be used to reduce the need for Government equity.

As the

the MTRC,

sole

the

shareholder of the Airport Authority and

government must also ensure that the

corporations have a sufficiently comprehensive financial package to enable them to raise loans in the private sector

without needing Government guarantees. This involves demonstrating, as a form of insurance, that the Government

will provide necessary financial support in the most

adverse circumstances.

It has been decided that the most cost-effective form

of insurance is for the Government to provide "callable equity", which can be drawn on by the corporations in such circumstances. This has been estimated at $5.9bn (1991

prices) for the Airport and about $7bn for the Airport Railway. These figures are not shown in the table of costs because they are only contingent liabilities.

are

Details of the latest government estimates and plans included in a paper, An Update on the Financial Aspects

of the Airport Core Programme. This paper has been

presented to the Airport Committee and is to be discussed

tomorrow (Thursday) morning at meetings of the LagCo Ad Hoc Group and the Airport Consultative Committee.

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