CONFIDENTIAL
155540
MDHIAN 6182
COSTS, (PARA 6 ABOVE). WE DO NOT EXPECT A FORMAL RESPONSE FROM THEM: BUT WE MAY GET A FEEL OF THEIR THINKING.
8.
AS YOU HAVE BEEN ADVISED PREVIOUSLY, THE LAND ASPECTS OF THE AR ARE NOW BEING CONSIDERED BY THE LAND COMMISSION WHO, WE BELIEVE. WILL AWAIT THE OUTCOME OF AC DISCUSSIONS BEFORE RESPONDING.
9. WE ARE NOT UP AGAINST A TIGHT DEADLINE FOR AR DISCUSSIONS. IDEALLY, WE WOULD LIKE TO GET A POSITIVE RESPONSE IN TIME FOR US
TO BE ABLE TO BRIEF FC ON THE AR FINANCE PACKAGE IN LATE APRIL. IF WE ACHIEVE THAT, THE AR PROPOSALS, WITH THE SUPPORT OF THE CHINESE, CAN BE MADE PUBLIC WHEN THE ADB MEETS HERE ON 3 MAY. THERE WOULD BE POLITICAL AND COMMERCIAL BENEFITS FROM SUCH TIMING: BUT NO REAL HARM WOULD BE DONE IF THE SIGNING OF THE AGREEMENT WITH THE MTRC SLIPS.
FINANCIAL SUPPORT FOR THE PROVISIONAL AIRPORT AUTHORITY
10. WE HAVE BEEN NEGOTIATING A FINANCIAL SUPPORT PACKAGE WITH THE PAA FOR THE PAST TWO WEEKS, AND HOPE TO FINISH BY 13 MARCH. THE PACKAGE WILL HAVE MANY FEATURES IN COMMON WITH THE MTRC ONE, THOUGH IT WILL DIFFER IN DETAIL. THERE WILL BE PAID UP AND CALLABLE GOVERNMENT EQUITY, AND THE LATTER WILL GIVE RISE TO CONTINGENT LIABILITIES. THERE WILL ALSO BE PROPERTY DEVELOPMENT RIGHTS. GOVERNMENT WILL PROVIDE SUPPORT IN CASE OF LATE COMPLETION. IF THE CHINESE ACCEPT THE MTRC PACKAGE, THEY SHOULD NOT HAVE TOO MUCH TROUBLE WITH THIS ONE.
11.
ONCE AGAIN, LAND PROPOSALS FOR THE AIRPORT ARE WITH THE LAND COMMISSION, WHO ARE EXPECTED TO DEFER A DECISION PENDING DISCUSSION IN THE AIRPORT COMMITTEE.
12.
WE EXPECT TO BRIEF THE AIRPORT COMMITTEE ON OUR PROPOSED FINANCIAL SUPPORT PACKAGE AFTER SUBMISSION TO EXCO ON 25 MARCH. DISCUSSION WITH THE CHINESE SIDE WILL BE TIME SENSITIVE, AS THE PAA CANNOT LET THEIR AIRPORT SITE FORMATION CONTRACT AT END MAY WITHOUT FURTHER EQUITY, WHICH MUST BE APPROVED BY FC. THE SEQUENCE OF EVENTS FOLLOWING EXCO APPROVAL WILL THUS BE:
(A) ISSUE OF PAPER TO AC ON 25 MARCH.
(B) RESPONSE FROM CHINESE SIDE BY 25 APRIL.
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CONFIDENTIAL
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