TNAG-2921-FCO40-4196-Visits-and-proposed-visits-by-Alastair-Goodlad--Minister-of--1993 — Page 43

CONFIDENTIAL

MR GOODLAD'S VISIT TO HONG KONG: 7-9 JANUARY 1994

AIRPORT

Background

1.

Difficulties on the constitutional front have put back the possibility of reaching an agreement with Chinese on the overall financing package for the new airport. The target date of July 1997 for completing the airport can be met only if HKG are prepared to pump in more equity than could be justified financially.

2. HKG have proceeded with project on a step by step basis. Construction has started on nine out of ten of the Airport Core Programme projects (the exception is the airport railway).

3. The project has reached the point where major funding needs to be committed from early 1994 onwards if it is not to stall completely. HKG have informed the Chinese of the position and will invite LegCo to consider two options:

(i) granting the minimum funds necessary to maintain the Provisional Airport Authority (PAA) HQ after March 1994,

(ii) approving additional funds upto, but not beyond, the level of HKG funding proposed in HKG's first financing plan for further key design work and site preparation. This is ExCo's and HKG's preferred option.

CONFIDENTIAL

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