TNAG-1512-FCO40-2070-Kowloon-Canton-highway-and-Kowloon-Canton-Railway-Corporatio-1986 — Page 114

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The Government is, in addition, playing a financially supportive role in other ways. is expected that over $500 million will be expended from the Capital Works Reserve Fund over the next two to three years on engineering works and land acquisition in connection with the provision of track beds and footbridges for the railway. This is in addition to considerable public funds already expended on forming track beds and reserves in Tuen Mun Town itself. To assist the KCRC with its cashflow in the early years of the LRT project, the Government has agreed that repayment of the $1 billion Government loan should be deferred until the start of 1993 provided that annual interest payments on the loan continue .

Certain other points may be of interest to potential lenders, and I state the appropriate policies accordingly :

(a) KCRC will have the sole right to operate

both the LRT and its complementary bus services within the Transit Area (to be defined by legislation);

(b) it is not the Government's intention for

the foreseeable future to invite public participation in the equity of the KCRC;

(c)

there is no present intention to amend the legislative powers under which the Governor appoints all members of the KCRC Board (a separate Board is not envisaged for the LRT); and

(d) KCRC will be empowered to determine fares

for the LRT, with similar provision by legislation in respect of complementary bus services.

We are willing to issue a similar letter addressed to the lenders to the LRT project acknowledging the existence of the loans, and related approvals under the legislation by the

Financial Secretary, and stating Government ownership and support as detailed above; and I or my staff are ready to discuss it and its implications with the lenders.

bcc: SMA; SLW; DFS

( I.F.C. Macpherson ) Secretary for Transport

CONNFIDENTIAL