TNAG-2413-FCO40-3515-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-fina-1992 — Page 78

CONFIDENTIAL

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Sir J. Coles m

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FROM: P F Ricketts

Hong Kong Department

DATE: 27 March 1992

cc: Sir I Coles

HKA 2Mr Burns

TRY Mr Broadbent,

APR 1992

Economic Advisers

HONG KONG NEW AIRPORT: FUNDING ARRANGEMENTS

A

B

1. We have not yet been sent the draft of the Hong Kong

Government's paper for the Airport Committee formally

consulting the Chinese on the financing plan for the Airport Authority. But we note from the speaking note used by

Mr Galsworthy today in briefing Guo on the overall costs of

the airport that HKG are hoping to hand over the financing

proposals next week. We are therefore likely to have very little time to comment. For that reason, I thought that the

Minister might wish to see over the weekend the attached

ExCo memorandum, setting out the funding arrangements. This

went to ExCo on 24 March. I assume from the terms in which

Mr Galsworthy spoke to Guo that it must have been endorsed.

2. The paper for the Airport Committee will clearly be based on the Executive Council memorandum. This is largely self-explanatory. There are no alarming cost increases. Indeed the forecasts for traffic growth (para 8) are encouragingly conservative. The only possible area of

concern pre 1997 (para 36) is that if the lending environment in 1993/94 is unfavourable, HKG may need to renegotiate its agreement with the Airport Authority.

MVSAEO/1

CONFIDENTIAL

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