-RMP
The decline in the rate of construction expenditures after 1981 and the increase in airport net revenues would eliminate the need for further Government advances, and would enable the Government to receive some repayment from airport net revenues so that the net obligation of the Government by the end of 1984 would be approximately HK $690 million. In addition to the total capital charges of HK $6,011 million, the interest charges on this foreign loan would be HK $3,973 million — a total cost of approximately HK $10,000 million. The net income remaining as a return on the investment would be more than HK $14,800 million. By the end of 1988, the total debt actually would be covered by the net revenue surplus.
The second financing plan, Concept B, calls for borrowing all the foreign funds required for construction as in Concept A but, in addition, borrowing all the local funds required for constructing the new airport starting in 1978, when site acquisition actually started. Interest charges, at 11%, would be paid from airport net revenue and by Government contributions in years when net revenue funds were inadequate. The Steering Group advised that borrowed local funds would need to be repaid within 10 years of the date of borrowing; accordingly, repayment is scheduled for 1987-1994. Under Concept B the need for new Government advances during each year of the new airport development period would be confined to very nominal amounts as follows:
Year
Advance (HK$ million)
1981 1982
15.0
13.7
These amounts, representing the share of interest costs not covered by airport net revenues, would be recovered by the Government in 1985.
Interest on the local loan from 1978 through 1994, would total HK $2,554 million. This amount, together with the capital charges of HK $6,011 million and the interest on the foreign loan of HK $3,973 million, would make a total cost of approximately HK $12,550 million. The net income remaining as a return on the investment would be approximately HK $12,250 million. By 1989, the total debts actually would be covered by the net revenue surplus.
With either of these financial plan concepts, the proposed new airport development is financially sound and feasible. Foreign and local loan balances are plotted for each concept in Figure 14. The total cash flow for each concept is also shown, defined as accumulated net cash flow plus the foreign and domestic loan balances. The new airport can pay off its capital development costs with its own generated fund sources within 4 to 5 years after it becomes operational.
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