TNAG-1060-FCO40-1310-Mass-Transit-Railway-in-Hong-Kong-1981 — Page 3

(a)

the Mass Transit Railway Island Line;

(b)

the Island Eastern Corridor Road; and

(c)

a modernised tramway system,

would result in an abrupt transition from a condition of inadequate provision of public transport capacity to one of over-provision, with generally higher average fares. Such a situation could well undermine the financial viability of all modes, but particularly the Mass Transit Railway and the modernised tramway system because of the heavy capital costs that would have been incurred in their construction. Furthermore, to modernise the tramway system in accordance with the Company's time table would mean the complete replacement of the tram track and track bed, as well as the underground and the overhead electrical systems. To do so would undoubtedly result in massive traffic disruption over the next few critical years when this could be least afforded, and during the period of construction of the MTR Island Line and Island Eastern Corridor Road. It would therefore be unacceptable on these grounds alone.

8

In view of the above the Wharf Company were asked if they were prepared to delay, as far as possible, the modernisation of the existing system. Their response was negative and the Company made it clear that their terms, as outlined in paragraph 4 above, could not be changed.

9

While, therefore, the maintenance of the existing tramway system until perhaps the end of the decade, if this had been possible, could have been an acceptable solution on public transport grounds, the Company's recent proposals were considered to be unacceptable. Consequently, other possible options were considered to provide for the maintenance of the existing system, at least until the opening of the MTR Island Line and preferably for some time thereafter, so as to ensure that the buses plus the MTR could provide sufficient services to replace the capacity lost as the tramway system was closed down.

10

(a)

(b)

A number of possible options were examined, namely:

A management agreement between the Company and Government under which the Company would continue to operate the tramway system, presumably on terms which would need to provide for rising maintenance costs, until the opening of the MTR Island Line. The system would then be gradually abandoned.

Similar to (a) above, but involving a new operator to be selected by tender, who would be required to buy the tram assets to be acquired by the Government from the Hong Kong Tramways Limited.

CONFIDENTIAL

機密