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Government to finance Kai Tak cruise terminal

Written by editor

Secretary for Commerce & Economic Development Rita Lau says the Government will finance the Kai Tak cruise terminal by taking up its construction and leasing its facilities to cruise operators upon co

Secretary for Commerce & Economic Development Rita Lau says the Government will finance the Kai Tak cruise terminal by taking up its construction and leasing its facilities to cruise operators upon completion.

The $7-billion project is due for completion in mid-2013.

Mrs Lau said today the decision was made in view of the sharp surge in construction costs and the recent financial market turmoil which will add risk and uncertainty to the cost and capital financing of the project.

“We would run the risk of further delay if we test the market again through another land tender,” she said, noting the Government has reassessed market interest in bidding and considered the likelihood of an aborting tender and its adverse consequences.

Mrs Lau said the Government’s decision to develop the cruise terminal through the Public Works Programme will give more certainty to a punctual project implementation and commissioning of the first berth.

Lease arrangements

The Government will tender two contracts – one for the site formation works, involving the construction of berth facilities, and the other for the cruise terminal building works including the immigration point and other support facilities. The contracts will be prepared in parallel.

“Under this approach the Government retains ownership of the site and terminal facilities. We plan to lease the terminal to an operator with a tenancy agreement of about seven to 10 years,” Mrs Lau said.

Through the tenancy agreement it is hoped to bring in market expertise to run the cruise terminal and to monitor the operator’s performance. Reference from overseas experience and views from the cruise industry and the travel trade will be drawn in formulating the tenancy arrangements.

Cruise terminal consultants with international experience will also be engaged to draw up the requirements for the design and build tender of the terminal to develop a terminal which is modern and able to meet market needs.

Mrs Lau added it is in the interest of Hong Kong to support the tourism industry by developing the cruise terminal which is estimated to generate annual economic benefits of $2.5 billion from 2023 and up to 9,000 jobs.