XN000022-1996-05-30 — Page 21

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Such borrowings will not need to be guaranteed by the Government, and there will be no need for the Government to provide additional equity to AA for the second runway project.

In addition the Government will, on its part, need to provide extra facilities and equipment to support the operation of the second runway at an estimated cost of about $600 million in money of the day.

The Government's facilities include additional air navigational guidance equipment and runway monitoring system as well as a back-up air traffic control complex for the Civil Aviation Department, additional meteorological equipment and systems for the Royal Observatory and extra facilities for the Police.

Mr Siu said the Government would shortly seek the approval of the Legislative Council's Finance Committee for funds for the government facilities to support the operation of the second runway.

According to AA's current business plan, it was envisaged that construction of the second runway would start in 1998 for completion in 2001.

However, the findings of recent studies by AA in consultation with the Government indicated a strong case for commissioning the second runway and the northwest concourse as soon as practical after airport opening.

In the light of the latest air traffic demand forecasts, increased throughput at Kai Tak up to closure and revised estimates of runway capacity at airport opening, the studies concluded that the new airport with a single runway will be unable to cope with the projected demand for aircraft movements during peak periods, within desired operational service standards.

The case to advance the commissioning of the second runway was strengthened by the fact that proceeding with early construction will produce savings in mobilisation costs and thereby lower construction costs.

All new construction works will be planned sequentially making use of contractors' resources and AA's supervisory staff as they become available on completion of the corresponding works on the first phase of the airport.

"We therefore believe that it is cost effective to proceed with the second runway and associated facilities as soon as possible," said Mr Siu.

He said proceeding with the second runway now would not have any adverse impact on the completion date of the first phase of the airport project.

End