XN000022-1992-11-24 — Page 2

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TUESDAY, NOVEMBER 24, 1992

EXPLANATORY INFORMATION ON PAA FUNDS PASSED TO FINANCE COMMITTEE

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THE GOVERNMENT ESTIMATES THAT DELAYING CONSTRUCTION AND CRUCIAL DESIGN WORK ON THE AIRPORT AT CHER LAP KOK FOR THREE MONTHS WOULD INCREASE COSTS BY NOT LESS THAN $1.3 BILLION, WHILE A SIX-MONTH DELAY WOULD PRODUCE AN INCREASE OF NOT LESS THAN $2.5 BILLION.

THESE ESTIMATES ARE CONTAINED IN EXPLANATORY INFORMATION ISSUED BY THE GOVERNMENT TODAY TO MEMBERS OF THE FINANCE COMMITTEE, WHO ARE NOW CONSIDERING THE GOVERNMENT'S REQUEST FOR THE PROVISIONAL AIRPORT AUTHORITY (PAA) TO RECEIVE AN $8.63 BILLION ADVANCE FROM THE CAPITAL INVESTMENT FUND.

THE FUNDS ARE NEEDED BY THE PAA FOR THE $9.041 BILLION SITE PREPARATION CONTRACT AT CHER LAP KOK AND FOR OTHER ITEMS OF EXPENDITURE.

THE INFORMATION HAS BEEN ISSUED ON THE ADVICE OF THE LEGCO AD HOC GROUP ON THE FINANCING OF THE AIRPORT CORE PROGRAMME, WHICH WAS BRIEFED ON THE REQUEST FOR FUNDS LAST FRIDAY.

IT IS CONTAINED IN FOUR ANNEXES TO THE MAIN FINANCE COMMITTEE PAPER ON THE FUNDS, WHICH WILL

BE CONSIDERED BY THE COMMITTEE ON FRIDAY.

A DETAILED ANALYSIS IS PROVIDED OF THE PROPOSED PAA EXPENDITURE, INCLUDING $1.088 BILLION FOR ON-SITE SUPERVISION AND SUPPORT FOR THE SITE PREPARATION CONTRACT.

"IN CONSIDERING VIEWS PUT FORWARD BY THE LEGCO AD Hor GROUP, THE GOVERNMENT HAS REVIEWED THE START OF CERTAIN DESIGN TO BE LET BY THE PAA.

CONSULTANCIES

"IN ORDER TO KEEP COMMITMENTS TO THE ABSOLUTE MINIMUM NEEDED TO ENSURE THAT THERE WOULD NOT BE OVERALL SLIPPAGE, THE GOVERNMENT HAS DECIDED TO DEFER SEEKING PUNDING FOR EIGHT OUT OF 13 DESIGN PACKAGES.

PROPOSING A POSSIBLE

"THIS MEANS THAT THE GOVERNMENT IS REDUCTION OF $355 MILLION IN THE TOTAL $8.63 BILLION BEING SOUGHT FROM FINANCE COMMITTEE," A GOVERNMENT SPOKESMAN SAID,

COMMENTING ON THE POTENTIAL COST OF DELAY, THE SPOKESMAN "OUR ESTIMATES SHOW THAT 1T WOULD BE EXTREMELY EXPENSIVE TERMS OF THE OVERALL COST OF THE AIRPORT TO EXTEND VALIDITY DATES, OR TO RE-TENDER, THE SITE PREPARATION CONTRACT. IT WOULD BE JUST AS EXPENSIVE TO DELAY CRUCIAL DESIGN CONTRACTS AT THE AIRPORT.'

SAID:

IN

"THIS DEMONSTRATES HOW IMPORTANT IT LS FOR THE SITE PREPARATION CONTRACT TO BE SIGNED BEFORE THE CURRENT TENDERS EXPIRE ON NOVEMBER 30, AND FOR CRUCIAL DESIGN CONTRACTS TO GO AHEAD.

"PROGRESS ON THESE CONTRACTS WILL ENABLE THE HONG KONG GOVERNMENT TO ACT IN ACCORDANCE WITH THE MEMORANDUM OF UNDERSTANDING

ON THE AIRPORT CORE PROGRAMME AGREED BY BRITAIN AND CHINA LAST YEAR.

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