TNAG-2413-FCO40-3515-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-fina-1992 — Page 124

CONFIDENTIAL

機密

Contingent Liabilities

10.

It is envisaged that the financial arrangements for the AA and the MTRC will entail,

in addition to equity injection described above, some contingent liabilities on the Government in

the form of callable equity and deficiency payments in the case of project delay. The maximum

contingent liabilities in respect of the AA is estimated at $5.9 billion while that for the Airport

Railway is estimated at about $7 billion (in March 1991 dollar value). The purpose of such

contingent liabilities is to provide a comprehensive financial package for each of the two

corporations to enable them to raise loans in the private sector without the need for Government

guarantee. This is achieved by giving assurances to potential lenders that the Government, being

the sole shareholder of the corporations, will provide the latter with the necessary support in adverse

circumstances. The undertaking of such contingent liabilities is a much more cost-effective means

of supporting the corporations in the construction, finance and operation of these projects. The

alternatives - direct Government expenditure in full or Government guarantee on the total amounts

of their loans for the full loan period - would be less cost-effective. The proposed financial

arrangements have been structured most cautiously so that the probability of the contingent

liabilities being called is not high.

AFFORDABILITY TO THE GOVERNMENT

11.

The financing of the whole ACP is planned in accordance with the strategies set out

in paragraph 2. Throughout the process of reviewing the scope and cost of the ACP and the

individual projects, and the structuring of the financial arrangements for the statutory corporations,

we have endeavoured to keep the overall cost down, balancing with the efficiency of the future

airport and the supporting infrastructure. At the same time, the cost to the Government (both Hong

Kong Government and the SARG) is maintained at an affordable and stable level.

CONFIDENTIAL

機密