TNAG-2413-FCO40-3515-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-fina-1992 — Page 112

CONFIDENTIAL

XCC(92)58

3

Members will be asked to advise whether this recommendation should be approved.

BACKGROUND AND ARGUMENT

early

M

4

B

In mid-1991, in the course of discussions with the Chinese Side over the construction of the new airport, the Chinese Side was given cost estimates in relation to a number of options for pursuing the PADS programme. They were made aware of our initial estimates of costs for constructing the main projects and for injections of equity in the Provisional Airport Authority (PAA) and the Mass Transit Railway Corporation (MTRC). In the course of the discussions, no definitive statement was made by the British Side as to which of the options was ultimately to be pursued. When the Airport Memorandum of Understanding (MOU) was initialled in June 1991, an Airport Core Programme was identified which included many, but not all, of the PADS projects including the Airport Rail (AR) and some projects from the Public Works Programme not originally included in the PADS programme.

5

In July 1991, after the initialling of the MOU, Finance Committee was informed of the estimate for the ACP and the expected apportionment between government and private sector (including the Corporations) funding. The total figure quoted at that time was $98.6 billion. (For the purpose of simple comparison, all prices quoted in this memorandum are in March 1991 dollar values, unless otherwise indicated.) A copy of the summary table of ACP costs shown in the July 1991 Finance Committee Information Paper is at Annex B.

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Detailed reviews of the ACP projects have been made, under the supervision of the New Airport Projects Co-ordination Office (NAPCO). These show that some costs have risen, some have fallen, and certain new requirements have been identified which should be included in the overall ACP cost. It is now clearly time to give a full account of these changes to the Legislative Council and the public. It is also apparent that the Chinese Side is waiting to see the up-dated overall cost estimate before deciding on their stand in relation to our proposals for the financing of the AR and the Airport.