TNAG-0426-FCO40-472-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 208

The Hong Kong Government, after detailed consideration of

these proposals and of the future "movement problem" in general,

decided in principle in April 1972 to proceed with the construction

of the mass transit railway, subject to satisfactory arrangements

being made for financing the project. This decision in principle

was reaffirmed in February 1973, when the Hong Kong Government also

decided firmly to proceed as soon as possible with constructing

the first four of the nine stages of the railway. (The first four

stages were reckoned to be the minimum system which could be

operated on a commercially viable basis: further stages beyond

stage 4 would be extensions to the basic system).

It is difficult, if not impossible, accurately to estimate

the total capital expenditure on the full system. For the first

four stages alone, the cost of construction and equipment is -

currently estimated at between Hong Kong dollars 5,600 and 6,000 million (about pounds sterling 470-500 million) spread over five to six years.

The substantial amount of capital involved is expected to be

met largely (about 60 per cent) from export credits of the ECGD

type. Another 15-20 per cent would be met from an equity

contribution from the Hong Kong Government, and the balance would

be raised from a mixture of market sources (e.g. bank loans,

Eurobonds, etc.). Apart from the Hong Kong Government's equity

contribution, the capital expenditure is expected to be repaid

entirely from the fare and other revenue (e.g. revenue from

advertising)/generated by the system.

A Hong Kong Government Steering Group is currently in

consultation with a number of groups interested in building the

railway with a view to negotiating a turnkey contract with one of

them for the complete construction and equipment of the first four

stages. The final selection of the successful group will be made

by the Governor in Council.