TNAG-2414-FCO40-3516-Hong-Kong-Port-and-Airport-Development-Strategy-(PADS)-fina-1992 — Page 57

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ACP COSTS IN MONEY OF THE DAY

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FRIDAY, JUNE 12, 1992

THE TOTAL COST OF CONSTRUCTING THE 10 PROJECTS IN HONG KONG'S AIRPORT CORE PROGRAMME IS $163.7 BILLION IN MONEY OF THE DAY TERMS.

A GOVERNMENT SPOKESMAN EXPLAINED TODAY (FRIDAY) THAT THIS FIGURE WAS EQUIVALENT TO THE ESTIMATE OF $112.2 BILLION IN MARCH 1991 PRICES, WHICH WAS PUBLISHED TWO MONTHS AGO.

"THE COST OF THE PROGRAMME HAS NOT CHANGED IN REAL TERMS AND REMAINS THE ESTIMATE FOR COMPLETING AND OPENING THE AIRPORT AND OTHER CORE PROJECTS IN 1997," SAID THE SPORESMAN.

"EVEN MORE IMPORTANTLY, THE CONTRIBUTION BY THE GOVERNMENT AND THE TAXPAYER OF HONG KONG OF $59.3 BILLION HAS NOT CHANGED SINCE IT WAS ISSUED IN THE MIDDLE OF 1991. THIS IS EQUIVALENT TO $80.4 BILLION IN MONEY OF THE DAY.

"SO THERE HAS BEEN NO COST ESCALATION IN REAL TERMS ON THESE PROJECTS - AND THE FIRST MAJOR CONTRACT, FOR THE TSING MA BRIDGE, HAS BEEN AWARDED WITHIN OUR ESTIMATES," SAID THE SPOKESMAN,

THE GOVERNMENT'S $80.4 BILLION (MONEY OF THE DAY) CONTRIBUTION COMPRISES, AS WE TOLD LEGISLATIVE COUNCIL LAST WEEK, $60.1 BILLION PUBLIC WORKS AND $20.3 BILLION IN EQUITY INJECTIONS INTO THE AIRPORT AUTHORITY AND MASS TRANSIT RAILWAY CORPORATION.

ALL OTHER FUNDING COMES FROM THE PRIVATE SECTOR, MUCH OF IT FROM INTERNATIONAL SOURCES. THIS INCLUDES EQUITY INVESTMENTS (FOR EXAMPLE THE WESTERN HARBOUR CROSSING AND FRANCHISES AT THE AIRPORT), PLUS COMMERCIAL LENDING FROM BANKS AND OTHER SOURCES.

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THIS MEANS THAT THE GOVERNMENT WILL BE MEETING LESS THAN HALF THE COST OF THE PROGRAMME WITH TAXPAYERS' MONEY, AND EVERY DOLLAR THIS GOVERNMENT MONEY WILL BE RECOVERED BEFORE 2010 THROUGH LAND SALES REVENUE AND DIVIDENDS, SAID THE SPOKESMAN.

30 THE GOVERNMENT WILL GET A VERY GOOD RETURN ON ITS INVESTMENTS, IN ADDITION TO ALL THE ECONOMIC BENEFITS FLOWING FROM THE NEW AIRPORT. FOR EXAMPLE, ITS EQUITY CONTRIBUTION OF $16.6 BILLION (MONEY OF THE DAY) IN THE AIRPORT ITSELF WILL YIELD DIVIDENDS OF ABOUT $56 BILLION BY 2010," SAID THE SPOKESMAN.

"THE GOVERNMENT PUBLISHED ITS EARLIER COSTS ESTIMATES IN MARCH 1991 FIGURES. THESE WERE UPDATED TO $112.2 BILLION. IN APRIL THIS YEAR, USING THE SAME 1991 BASE IN ORDER TO MAKE IT EASY FOR THE PUBLIC TO COMPARE LIKE WITH LIKE.

"THIS ENLARGES TRANSPARENCY ON THE COSTS OF THE ENTIRE PROGRAMME BECAUSE ANY INCREASES IN REAL COSTS WILL BE INSTANTLY VISIBLE, AND WILL NOT BE OBSCURED BY ALLOWANCES FOR INFLATION.

"BUT MONEY OF THE DAY FIGURES ALSO HAVE TO BE PRODUCED TO SHOW THE ESTIMATED EFFECTS OF INFLATION DURING THE DESIGN AND CONSTRUCTION PERIOD OF THE VARIOUS PROJECTS. THESE FIGURES ARE USED IN FIXED PRICE CONTRACTS AND IN PLANNING BANK BORROWINGS BY THE AIRPORT AUTHORITY AND THE MTRC.