margin from airport operations, defined as the annual net revenue divided by the annual gross revenue, will be 75% in 1995 and will fluctuate slightly above and below that amount in the preceding 20 years. The accumulated annual net revenue for the 21 years will be HK $19,540 million (current dollars).
The Steering Group recommended that disposal of Kai Tak Airport land begin in 1987, two years after the opening of the new airport, and be completed in 1992, with equal portions sold for cash in each of six years. The value of the disposable land in 1973 prices was estimated to be HK $2,000 million. Allowing for a 6% per annum inflation rate, a total of HK $5,258 million in current dollars will be realized from the sale. The Steering Group recommended that this estimated value be adopted as the basis for the financial plan.
Approximately HK $24,800 million
HK $19,540 million from net
-
revenue and HK $5,258 from the sale of Kai Tak - would be available in the 1975-1995 period to cover the capital costs of Kai Tak expansion and the construction of a new airport.
At the recommendation of the Steering Group, two methods of financing the construction were analyzed. The first plan, Concept A, would provide the following:
(1) All expenditures of local currency would be covered by airport net revenues and, when these were inadequate, from general government revenues, with no interest obligations.
(2) All expenditures of foreign currency would be covered by long- term loans carrying an interest rate of 11% per annum from date of drawdown and repayable in 20 years in equal installments starting in 1985.
Local currency expenditures for the new airport would total HK $2,601 million (current dollars) and foreign currency expenditures HK $2,984 million. Under Concept A the need for new Government advances during each year of the new airport development period, 1975–1984, would be as follows:
AMP-
Year
Advance (HK$ million)
1978
108
1979
155
1980
461
1981
569
35
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