TNAG-2143-FCO40-3062-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-1990 — Page 83

1890-10-05 17:03 INFORMATION SERVICES DEFT

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"OUR VIEW IS THAT SUCH A FRANCHISE WOULD BE ATTRACTIVE AND THE PROCEEDS FROM THE TENDER EXERCISE COULD AT LEAST MATCH THE COST OF CONSTRUCTION.

"WE HAVE TOTAL CONFIDENCE IN THE

PROJECT'S

LONG-TERM

VIABILITY.'

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SIR DAVID EXPLAINED THAT IF THE PROJECT WERE TO BE TENDERED ON A BOT BAGIS, THE BIDDERS WOULD BASE THEIR JUDGEMENT OF ITS VIABILITY ON THREE MAIN FACTORS: THE COST OF CONSTRUCTTON, THE REVENUE WHICH IN TURN DEPENDS ON TRAFFIC FORECASTS AND THE LEVEL OF TOLLS, AND THE PERCEIVED RISKS INVOLVED.

"WE ARE ADVISED THAT THERE CAN BE A HIGH DEGREE OF CERTAINTY OVER THE COST OF CONSTRUCTION, BUT THAT PROSPECTIVE BIDDERS MIGHT NOT HAVE THE SAME DEGREE OF CONFIDENCE WITH REGARD TO THE OTHER TWO FACTORS.

AND THE WORLD ECONOMIC

"THE CONTINUING CRISIS IN THE GULF AND THE WORLD SITUATION HAVE NOT HELPED THE COMMERCIAL CLIMATE.

"DESPITE THESE PERCEIVED UNCERTAINTIES, AND I STRESS THE WORD 'PERCEIVED BECAUSE WE BELIEVE THAT

'

SOME OF THEM ARE UNFOUNDED, WE HAVE NO DOUBT THAT THERE WOULD HAVE BEEN A SUBSTANTIAL RESPONSE TO OUR CALL FOR BOT BIDS.

"BUT THE COMMERCIAL WORLD WORKS ON THE PRINCIPLE OF THE HIGHER THE RISK THE GREATER THE REWARD' WITH THE LIKELY RESULT THAT THE PROJECT WOULD HAVE BECOME MORE COSTLY IN TERMS OF GOVERNMENT SUPPORT THAN WE BELIEVE TO BE JUSTIFIED.

"IT WOULD THUS HAVE BECOME MORE EXPENSIVE FOR THE HỒNG KÔNG TAX-PAYERS."

THE CHIEF SECRETARY STRESSED THAT AN IMPORTANT ELEMENT OF THE PORT AND AIRPORT DEVELOPMENT STRATEGY IS THE OPPORTUNITY IT PROVIDES FOR PRIVATE SECTOR FINANCING.

"THE COST OF THE LANTAU BRIDGE REPRESENTS LESS THAN 10 PER CENT OF THE WHOLE PROJECT AND SUBSTANTIAL OPPORTUNITIES REMAIN FOR PRIVATE SECTOR INVOLVEMENT IN SUCH MAJOR PROJECTS AS THE AIRPORT ITSELF, THE PORT, THE AIRPORT RAILWAY AND THE THIRD CROSS HARBOUR TUNNEL.

"WE BELIEVE THAT THE CERTAINTY INJECTED INTO THE WHOLE PROJECT BY OUR DECISION TODAY WILL DO MUCH TO ENCOURAGE INVESTMENT IN THESE OTHER PROJECTS, AND WE WILL OF COURSE DO ALL WE CAN TO FACILITATE THIS," HE SAID.

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