Public may
SOUTH CHINA MORNING POST
have stake Mass transit railway [
In the Tube
kiovernment may invite the
SS
al a later stage to scribe equity capital for the struction and operation of Ingkong's $7,000 million transit underground way system. The Financial Secretary, Mr P. Haddon Cave, disclosed S yesterday when he Inounced in Legislative Juncil that formal approval kl been given for the hstruction of the first four of Je stages of the underground
way. Mr Haddon Cave said a lic corporation would have [be set up, under a special Jinance, to be responsable fe
implementation 川 the Hject, whatever the Immanentl Construction arrumpements.
Phis_corporation is to be jependent of Government but , at least initially, be owned firely by Government,
SO
(Cont'd from Page 1) maintain the system after construction.
Mr Haddon-Cave said the size and nature of the project had created requirements which were, in a way, conflicting. The capital structure of the
"On the one hand, the corporation will, of necessity, System will need to be operated commercial lines if its have a very high loan gearing but the Government will take financial viability is 10 be an equity position in the form assured." he said. of a cash subscription.
On the other hand, the Land and expenditure for the Financial Secretary added, the
of far been magnitude the capital project have charged to public revenue.
requirement, the length of the "Later on," the Financial construction period, and the role which the Secretary pointed out, "the important public might well be invited to system would have to play in subscribe further equity the Government's overall capital."
transport policy in the 1980s. Discusing the functions of all pointed to the need for the the corporation. Mr Haddon operating authority Cave said the extent to which it subjected to a greater degree of Would be responsible for Government supervision and building up its own engineering control, design and project management
This would be similar to capability would depend on public utility undertakings in
single or #1
multi Hongkong at the moment. contract approach was to be Meanwhile, Government's adopted to construct the tube. decision to go ahend full speed He said an entity would also with the project had long been be required to operate and expected.
whether
to
'
to
he
It was Government's acceptance of its high-powered Steering Group's findings, after eight months of intensive investigation, that it would be possible to raise the capital required for constructing the full mass transit railway,
The findings. Mr Haddon- Cave said, bad strengthened the Government's belief that the system would be financially viable.
This meant that a sufficient cash flow could be generated to enable the capital cost and accumulated interest to be
1
repaid from the revenue from fares and other sources, over a given period of years.
He said that no fewer than 21 companies and consortia. comprising financial. engineering and other interests in Hongkong and seven major industrial countries. had responded to the call made by the Steering Group fast July to submit preliminary proposals.
Thirty others, said Mr Haddon Cave, had expressed an interest or offered to assist. in one way of another, in the project.
simple contract approach, thị finance, engineering, equipmen would be awarded to just on consortium.
th
This is known as "turnkey basis“ where th consortium could he selected by negotiation or by tender.
On the other hand, the project could be split up into a number of contracts, each to be let separately by internationa competitive tender, with the financing arrangements beini handled by group merchant bankers specially retained for the purpose.
a
(Y
Mr Haddon Cave said there advantages and
were
disadvantages
of either
"This widespread international interest in the project means that we can look. forward to true international a methods, such a s the competition for the contract or contracts for the construction and equipment of the mass transit railway.” he added.
One of the points repeatedly stressed by the Financial Secretary in his speech was that no time would be lost in getting the project going.
Preparatory engineering design work, soil investigations and others were well in hand, he stated.
All that remains now is for Government to decide on the exact financing and construction arrangements to be adopted.
The most important. as Mr Haddon Cave pointed out, would be whether one single consortium or a number of companies and consortia. would be appointed to construct the first four stages of the tube.
Both these approaches, he said, would be equally feasible.
Elaborating, he said in the
1
availability of export credi finance, the likely price of the project, the likely starting date and the overall period of construction,
He said one of the attractions of the multi-contract approach would likely be that it could generate a greater amount of competition which, in turn, lead ໄດ a lower overall contract price.
On the other hand, he added. the mass transit railway would be the first of its kind in Hongkong, in terms both of the magnitude of the capital required and the length of the construction period.
In this, one of the main advantages of the single- contract approach would he its ability to offer a degree of certainly over the amount and terms of export credit finance available.
This, he added, could well offset the disadvantage of a higher contract price.
He said a decision could not now be made because thei information available from the various consortia that had put up single-contract proposals was yet insufficient to enable this to be done.
Mr Haddon Cave said in these circumstances. Government would hold further consultations with several of the consortia.
This would be to obtain, to the maximum extent possible and within a strict time schedule. the information necessary for a decision to he reached.
However, Mr Haddon-Cave stressed. the consultations should not be taken to mean that
a decision had been reached that Government preferred a single-contract approach.
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