ENG-1992 — Page 279

AIRPORT

projection of out-turn prices. This is particularly relevant to the ACP because most contracts are let on a fixed price lump sum basis, meaning that the contract award price is already adjusted to cover inflation over the contract period).

The government's capital expenditure on the ACP works programme is approximately $60 billion. This is expected to amount, between 1992-3 and 1996–7, to 25 per cent of the government's total capital expenditure (which covers public works, and other expenditure from the Loan Fund and non-recurrent account of the General Revenue Account). The remaining 75 per cent of the government's total capital expenditure will be spent on other social services and essential activities.

The ACP provides ample opportunities for private sector participation. These can be in the form of: investment in franchises for the Western Harbour Crossing and facilities at the airport; commercial lending for the airport and the railway; and real estate development associated with the airport and the railway.

Benefits for the Community

The main benefits for the community - in addition to the airport itself - will come from the improved road and rail facilities, an easing of congestion in West Kowloon, and the opening up

of North Lantau. The closure of Kai Tak will also have environmental benefits because some 350 000 residents living under the flight path will escape the noise of aircraft. Overall there will be the substantial benefits to Hong Kong's economy that have already been mentioned.

The government's proposed financial contribution would also yield substantial benefits for taxpayers. For example, it is estimated that by the year 2020, the new airport, the Lantau Fixed Crossing, and the Airport Railway would have generated additional revenue for the government totalling over $300 billion comprising: nearly $50 billion from the airport at Chek Lap Kok (over and above the revenues which Kai Tak would generate); over $75 billion from the MTRC; over $190 billion from the Lantau Fixed Crossing. An internal rate of return approaching 12 per cent by 2020, and close to 15 per cent by 2040, has been forecast on the government's proposed investment in those elements of the ACP directly required to support the new airport.

New Reclaimed Land

The ACP involves the creation of 1 828 hectares of new land comprising: a 938-hectare reclamation area, centred around the islands of Chek Lap Kok and Lam Chau off northern Lantau, which will provide a platform of 1 248 hectares (including the islands) for the airport itself; a 540 hectare strip along the northern shore of Lantau for Tung Chung New Town Phase I; a 330 hectare reclamation off West Kowloon; and a 20-hectare section of a larger reclamation adjacent to the Central-Wanchai urban area on Hong Kong Island.

The West Kowloon Reclamation will provide housing for 91 000 people and some five hectares of commercial space, as well as vital road and rail arteries linking Kowloon with the new airport and the north-west New Territories. A 20-hectare portion of the Central-Wanchai Reclamation will provide opportunities for the development of Hong Kong's central business district, plus a site for the Central terminus of the Airport Railway. Both reclamations will include abundant landscaping and areas of open space.

Tung Chung new town, occupying two valleys at Tung Chung and Tai Ho on northern Lantau and a coastal strip of reclamation between them, is planned to house 20 000 people

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