TNAG-0850-FCO40-1060-Future-of-Hong-Kong-New-Territories-leases-1979 — Page 30

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The proof of the seriousness of the situation comes from consideration of the

deal that Sir Lawrence Kadoorie has acheived to enable a new power station to be built at Castle Peak ( in the New Territories ). This is a HK$8.4 billion deal, in essence a three-way agreement between China Light & Power (HK),

Britain and China. The Chinese will supply oil and coal to the plant, Britain will supply the plant with its main generators and other equipment (and in

turn, and this is crucial, obtain a UK Government Export Credit Gurantee for the

a(UK) investment capital), China will buy mining equipment from Britain and

China Light & Power will supply £ Guangzhou (Canton) with off-peak power.

This is fine and no doubt all parties are happy about it. However, if the

financial press is read xacarefully we see that George Lauriat writing in the

Far Eastern Economic Review on March 30 1979 said:

He was un candent

+

"Because the plant will not be fully operational before 1987,

only 10 years before the theoretical expiry of the New

Territories lease, it would have been virtually impossible

to raise the the necessary capital on the open market.

(My emphakis).

Here we see the operation of the Lease Problem at in full flight. If auch a

project with a top-flight Hong Kong company involved, co-operation from UK, contracts for energy-supply from China in the bag, goodwill and smiles

emanating from all sides obvious tom a blind man if they cannot raise

commertial market capital, what chance has Joe Bloggs Inc. of Boston, Mass. got of getting his loans at competitative terms when he can only get title to land the sine qua non of loan acquisition) this year for 18 years, next

year for 17 years and so on? The answer is NIL And in the case of the second airport, what sort of equipment could Britain (or any other country that operated a similar capital-risk underwriting insurance scheme) sell that would enable any significant part of the costs to be covered by government rather than commercial app paper? Very little. The major costs are in the locally-generated construction, the actual earth-moving.

So now we can see why no date has been announced for starting the construction of the vitally needed, and yet never-to-be-built, second airport it is feasible in every respect, engineering, time, location, even ecologically, but IT CANNOT BE FINANCED. For over a decade, there have only been feasability studies, consultants reports and more studies, and time has already passed when construction should have begun to meet the 1985 cut-off in the viability of Kai Tak. It is order to ask why

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