Mr. Godden
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Cross Harbour Tunnel
It is regretted that the brief prepared for Lord
Shepherd did not arrive in Hong Kong until after he had
left. It was put into the bag here in good time but,
probably because of typhoon Carla, the bag did not reach
the Colony until 21 October and the mail containing the
brief was not handed to the Hong Kong Government until
23 October.
2.
However, the opportunity was taken of Mr. Cowperthwaite's
presence in London last week for talks on E.E.C. matters to
go through with him and representatives of E.C.G.D. and the
Treasury the conditions under which the Hong Kong Government
might give a 100% guarantee for E.C.G.D's cover, with H.M.G.
meeting half the sum involved should Hong Kong's guarantee be
called. As a result, those conditions have now been modified
and are in a form that Mr. Cowperthwaite feels able to accept
for subuission to Executive and Legislative Councils in Hong
Kong. It is not possible, of course, to say whether these
Councils will accept this proposition and the other
considerable financial commitments involved in the Tunnel
project, nor is it certain that Costairs, the Contractors,
will feel able to extend the validity of their tender while these matters are being decided. We understand that Costain's
reluctance to hold the position open is not because of the cessation of the monthly retainer (which was in any case only a limited and temporary arrangement) but bocause they cannot afford to tie up in this way skilled staff on unproductive
work.
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3. As Colonel Clague indicates in his letter of 21 October,
there is a shortfall in the equity required for the project.
This was occasioned by Colonel Clague and his colleagues reducing the amount they were prepared to subscribe from an original 77% to 55% of the equity capital, a difference of
1.475 million. The Yaumati Ferry Company declined to take
up any of this so the promoters invited C.D.C. to participate;
but, because there are needier bidders for its limited funds,
the Corporation was unable to consider becoming involved.
There is no other Agency in this country which might be asked
to fill the gap. A draft reply to Colonel Clague along these
lines is below.
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4.
Mr. Montague has also written on this subject. A draft
reply is attached.
Copy (without enclosures) to:
Mr. H.P. Hall.
(W.58 Corter)
.10.67.