L
Mr Stone, HKD
>
MKC 182 12
From:
la
329
Paul Fifoot Legal Advisers
Date:
12 December 1990
attached
PADS: LAND COMMISSION: YOUR MINUTE OF 5 DECEMBER
1. Your minute seems to have been overtaken by Mr Ehrman's letter to Mr Heap of 22 November which you copied to me on 6 December. Hong Kong appear to have proposed that the Airport Authority (which I assume will replace the Provisional Airport Authority) will be a non-government body, and will be granted a lease. They also appear to assume that the lease will have to be discussed in the Land Commission. In view of this, assumptions based on the precedent of the mass transit railway would seem to be irrelevant.
2.
There is one point that does slightly surprise me about Mr Ehrman's letter to which I should draw your attention, and that is the reference to the current work being undertaken under the terms of "an advance possession licence which does not need the approval of the Land Commission". It may very well be the case that such a licence does not require the approval of the Land Commission, but an issue does arise whether any input into the development of the site, and in particular financial interest, is dependent upon the grant of a lease when approved by the Land Commission. If the Hong Kong Government are to be the sole source of financing for the new airport, then they are the only equity risk takers in the event that problems arise in the Land Commission on account of their not having been any advance agreement with the Chinese that a lease will be granted. However, it is not only equity interests which may be at risk. Construction companies may well have an interest in whether there will be a lease, or whether there is a Chinese commitment to the grant of a lease, in that it may affect such companies' commitment of resources, their need to take out insurance against the breakdown of the project with the consequence that their expectations of revenue may not be fulfilled. Certainly, if I were representing a construction company, the prospect of, and commitment to, the grant of a lease would be a matter on which I would need full disclosure in order to advise the company on the consequences of a possible breakdown of any contract.
6PFABK
Paul Fifoot
-
No comments yet.
Private notes are available after approval.