TNAG-0424-FCO40-470-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 108

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In any case, the MTSG was not prepared, at this stage, to change its assumptions as to MTR fares, although this might

have to be reconsidered at the end of the day. Mr. Kindersley

said that, if the MTSG's assumptions remained unchanged, it

might be necessary to consider from the ECGD's viewpoint

whether the project would be financially viable. Mr. Haddon- Cave reiterated that the Hong Kong Government would be quite

prepared to abandon the project if its financial viability

were seriously in doubt.

8. In further discussion, Mr. Kindersley suggested that it should be possible to arrange for London Transport to undertake,

at no cost to the Hong Kong Government, an exercise on the KTR

fare structure. Mr. Haddon-Cave said this was an interesting suggestion, but doubted whether such an exercise would bring

out any significant facts which the MTSG did not already know about the Hong Kong public's reaction to fare increases. Mr. Kindersley pointed out that an extra 1% p.a. increase in fares would very substantially affect the project's financial viability. Mr. Haddon-Cave said he would be interested to see

the results of any calculations, and suggested that Lazards' representatives confer with Mr. Lau with regard to details of

the TSG's revised initial fare structure.

9. The British Group's response having been delivered, Mr. Wiltshire reiterated that there were important differences between the positions of the E & M and civil engineering sub-

groups. Mr. Haddon-Cave said he had taken careful note of the

British Group's response, but was not sure of its implications for the British Group's position. He wondered whether it was

the British Group's wish to withdraw from the exercise if the points they had made were not acceded to by the MTSG. Mr. Wiltshire said the British Group did not propose to with- draw, and would "go on talking as long as there was something to talk about" Mr. Kindersley added that the British Group

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