ENG-1995 — Page 302

16 THE AIRPORT CORE PROGRAMME

GOOD progress continued to be made on implementing the Airport Core Programme (ACP), both in the construction of all 10 core projects and in financing arrangements for the new airport at Chek Lap Kok and the Airport Railway. The ACP, one of the world's largest civil engineering programmes, is designed to provide modern, efficient air transport facilities, together with associated road and rail facilities and new land, that will support the territory's continued economic expansion well into the next century.

Apart from the new airport and the Airport Railway, the ACP projects comprise five road projects, including tunnels and bridges, stretching from Central District under the harbour, along the western shore of the Kowloon peninsula, across the islands of Tsing Yi and Ma Wan, and along the North Lantau coast; two major land reclamations in West Kowloon and Central District (in addition to the land reclaimed for the airport); and a new town at Tung Chung, North Lantau.

In May, 1995, agreement was reached by the British and Chinese sides of the Airport Committee on the Airport Authority Bill, which provides for the recon- stitution of the Provisional Airport Authority (PAA) as the Airport Authority (AA) to enable it to provide, develop, operate and maintain the new airport. The Bill was passed by the Legislative Council in July. On December 1, the AĂ Ordinance came into operation and a 17-member AA Board was established on the same day.

The British and Chinese sides of the Airport Committee agreed on June 30 that the Hong Kong Government could enter into Financial Support Agreements (FSAs) for the new airport and the Airport Railway with the AA and the Mass Transit Rail- way Corporation (MTRC) respectively. These agreements provide the government assurances needed to enable the two statutory bodies to launch their borrowing programmes in a cost-effective manner and press ahead with the airport and the Airport Railway projects. The agreements with the MTRC and the AA were then signed on July 5 and December 1, respectively. The MTRC raised a syndicated loan of $6 billion in Hong Kong in September, and issued its first Yankee Bond (US$300 million) in New York in October, part of the proceeds of which will finance con- struction of the Airport Railway. In November, the then-PAA signed an under- writing agreement with a group of 11 leading banks for the arrangement of an $8.2 billion syndicated loan facility. The credit agreement is expected to be signed in early 1996.

Agreement was reached with the Chinese side on the award of several critical franchises for air cargo, aircraft catering and aviation fuel supply services. These franchises were to be awarded by the AA in late 1995 or early 1996.

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