TNAG-0424-FCO40-470-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 253

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The column headings used in the cash-flow table are

explained as follows:

(a) The Corporation's own cost consists of:

(i) land acquisition costs, estimated at $200 mn at mid-

1973 prices, less possible resales of surplus land estimated at $50 mn at mid-1973 prices;

(ii) site investigation costs (including soils investigations and diversions of utility services) estimated at $41 mn;

(iii) Consulting Engineers' fees, estimated on the basis of

their present fees, but adjusted to take account of Intermetro's proposal to take over the detailed design of the system;

(iv) site supervision costs, estimated at $130 mn;

(v) MTR Corporation management costs, estimated at $152 mn

over the construction period of Stages 1-4; (subse- quent management costs are included in operating expenses).

(b) The assumed contract price is as set out in paragraph 17

above.

(c) Replacement of equipment is assumed to take place at the

end of the life of the asset concerned as predicted by the Consulting Engineers, at prices prevailing in the year of replacement.

(d) Operating expenses are as estimated by the Consulting

Engineers at mid-1970 prices, escalated at 6% p.a. Expenses in the first two years have been adjusted to take account of the cost of MTR Corporation staff trans- ferred from construction to a maintenance function.

(e) Operating revenue consists of:

(i) traffic or fare revenue, estimated by applying the

fare structure briefly described in paragraph 10(a) of memorandum XCS(73)8 to the Consulting Engineers' traffic volume estimates (as adjusted for the first two years in accordance with the revised construction programme);

(ii)

and

other revenue (mainly advertising revenue), estimated at 5% of fare revenue.

(f) The project cash flow represents the sum of columns (a) to

(e) above.

(g) Interest payable is estimated at 6.5% p.a. in respect of the export credit finance provided by Intermetro, and at 8.5% in respect of other sources of finance (excluding equity).

(h) Equity contributed by the Hong Kong Government to the

capital of the MTR Corporation is assumed to be $800 mn.

(i) Contractor's Finance is as indicated by Intermetro. It has

been assumed that interest on export credits would be capitalised over the grace period (see paragraph 10(£) above).

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