TNAG-0424-FCO40-470-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 250

0003160 G.F. 316

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(b) Covergae of price estimates

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→ 2 -

The estimates are based substantially on the Consulting Engineers' design, except that:

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(a) Chater Station and the line from Chater to Admiralty

have not been included;

(b)

and

a number of minor cost items have been omitted.

The estimates include the costs of the detailed design, construction and equipment of Stages 1-4 and of project management and contract insurance. They do not include contingencies, unforeseen circumstances and cost escalation.

(c) Provisions for price variations

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All prices would be subject to escalation in accordance with agreed formulae to be included in the contract. Price adjustments would also be made in cases of 'force majeure' as defined in the conditions of contract as well as in unforeseen circumstances.

(a) Payment terms

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The company has put forward the following detailed proposals as regards payment terms:

(a)

(b)

(c)

In respect of civil works, bills would be presented bi-monthly for settlement in respect of work completed. An advance payment of 5% of the contract value of civil works would be made at the time of delivery of work sites (against a bond or bank guarantee which would be refundable when the organisation of construction sites is completed), and further advances totalling up to 10% of the contract value of civil works would be made against construction equipment and spare parts received on site. The total amount of advances would be deducted from the bi-monthly bills in ten instalments, beginning from the time when 40% of the estimated total value of the civil works has been built.

For rolling stock, 5% of the value would be payable on approval of the final design; 5% on acceptance of the prototype; 60% on shipment; 20% on arrival in Hong Kong; and 10% after completion of the first 5,000 km of operation.

For other E & M supplies, 10% of the value would be payable on the client's agreement to begin manufacture;

50% on shipment; 30% on arrival in Hong Kong; and 10% on completion of installation.

Export Creidts/Consortium Finance

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Intermetro has offered to provide export credit finance on the following terms:

(a) Amount: $1,630 mn (or 63% of the estimated contract price of $2,573 mn, see paragraph 5 above). The amount of credits could be increased to cover cost escalation.

(b) Drawdown: spread over six years in relation to the payment terms proposed (see paragraph 9 above).

(c) Interest and charges: 6.5% per annum inclusive of all

charges.

(a) Repayment: spread over nine years commencing from the

date of completion of construction.

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/.... (e)