TNAG-1512-FCO40-2070-Kowloon-Canton-highway-and-Kowloon-Canton-Railway-Corporatio-1986 — Page 113

CR 13/581/84

DENTIAL

H.M.G. Forsgate, Esq., OBE, JP, Chairman,

Kowloon-Canton Railway Corporation, c/o Jardine Matheson & Co. Ltd., Hopewell Centre, 33/F, 183 Queen's Road East, HONG KONG.

lex F

1st March 1985

It is understood that in proceeding with the project for the Light Rail Transit System ("LRT") in the Western New Territories, the Kowloon-Canton Railway Corporation ("KČRC") has adopted a turn-key project approach including the requirement that the successful consortium will be responsible for raising the necessary funds. In order to assist your financial consultants, this letter sets out certain matters which relate to involvement of the Hong Kong Government in the project.

The Kowloon-Canton Railway Corporation is a public corporation, wholly owned by the Hong Kong Government. This fact, coupled with the Government's responsibility to ensure satisfactory public transport for the community, including the successful development of the KCRC, demonstrates the Government's involvement and interest. With this background, the KCRC was invited by the Governor in Council to consider taking on the LRT project as owner/operator, on the understanding that the Government would not be called upon for any financial input and would not provide any loan guarantees. Under the Ordinance, the KCRC may not construct any extension of the KCRC or a separate project such as the LRT, without the approval of the Government. Further, the level of loan commitment of the KCRC has to be approved by the Financial Secretary. KCRC will be granted the necessary approvals, including the level of loan commitment necessary to meet the LRT loan requirements, in order to complete the LRT project.

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