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Chris Yeung

Linda Choy

BRITAIN and China are set to reach a much-delayed overall agreement on the financing of the new airport soon, a senior mainland official said yesterday.

  Economics department head of the Hong Kong and Macau Affairs Office, Mr Zhang Liangdong, said he hoped the Sino-British Airport Committee would meet soon to agree on the broad financial arrangements for the Chek Lap Kok plan.

  His remarks, made in Beijing, were the strongest signal since the last airport committee meeting in June that the two sides had resolved the impasse on a final accord on the airport.

  Mr Zhang confirmed that Britain had agreed to cap the total amount of debt, thus producing the overall financial agreement.

  The two sides would then discuss two financial support agreements: for the Provisional Airport Authority (PAA) and the Mass Transit Railway Corporation (MTRC), said Mr Zhang, who is directly involved with the negotiations.

  Mr Zhang believed the overall agreement would be ready very soon.

  Overall financial arrangements would require the level of government equity to be $60.3 billion. The level of borrowing of the airport and rail corporations would be $23 billion.

  The two sides had disagreed on whether the level of debts should be capped at $23 billion. Government officials have expressed concern that it might not be practical to impose a cap because of variables, such as interest rates.

  The Government has also hinted that the two financial support agreements were to be an integral part of the overall financing deal and all needed to be wrapped up at the same time.

  Government officials declined to say whether they had bowed to China's demand on the order of agreements to be discussed.

  But a spokesman said it was a 'useful step forward' for the two sides to focus on overall arrangements.

  He said they hoped the two sides would soon agree on the two financial support documents so they could borrow money from banks as soon as possible.

  It is understood the British side has agreed to 'make funds available' from the government coffers to cover any debts in excess of the $23 billion agreed by the two sides.

  One source said there was now no major obstacle to a final deal being made this month.

  Another source said: 'The Chinese side is as anxious as we are to get an early agreement.'   But officials said no date had been fixed for an airport committee meeting.

  Governor Chris Patten said the Government had made 'a series of major and constructive efforts to get an agreement on the airport'.

  'So I hope that we may at last hit the jackpot,' he said.

  'There isn't very much dividing the two teams of negotiators. But there hasn't been very much for a very long time.'   Construction on the new airport would proceed faster if an overall financial deal was reached, he said.

  Secretary for Economic Services Gordon Siu Kwing-chue said more than 70 per cent of the site formation at Chek Lap Kok had been completed.

  He expected the Airport Corporation Bill to be tabled to the Legislative Council by the end of the year.

  In Beijing, Mr Zhang said: 'We have raised some very concrete suggestions [on the overall agreement], they are reasonable suggestions and capable of reflecting the consensus reached by the two countries during the past two years of negotiation.'       Noting that future PAA spending would be closely related to the Airport Corporation Bill, Mr Zhang said it was necessary for the bill to be discussed side by side with the two financial support agreements.

  'The bill touches on many aspects of the future financial arrangements between the Government and the PAA. If China and Britain could not agree on the bill, this will affect seriously the negotiation on the financial support agreements,' he said.



Deal near on airport financing, says China