TNAG-0422-FCO40-468-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 124

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Wednesday, February 14, 1973

in the

"This corporation is to be independent of the Government

sense that it will not be a government department but will, at least

initially, be owned entirely by the Government," he stressed.

The capital structure of the corporation, he said, would of necessity

have "a very high loan gearing" but the Government intended to take an equity position in the form of a cash subscription, land and expenditure so far

charged to public revenue

"Later on, the public might well be invited to subscribe further

equity capital," he added.

Contracting

On the question of contracting, the Financial Secretary said no confident decision could be made at this stage as to whether to award a single contract for the entire project, or whether to split the project into a number of contracts, letting each one separately by international competitive tender with the financing arrangements being handled by a group of merchant bankers specially retained for the purpose.

This, he explained, was because not enough information was available on the prices and credit terms likely to be available from the various consortia which had put up single-contract proposals.

Further consultations with several consortia, he said, were necessary before a decision could be reached.

The Financial Secretary emphasized that both approaches were "equally feasible" and said the fact that further consultations would be held with

certain consortia "does not indicate a preference for the single-contract approach."

/Mr. Haddon-Cave ..