CONFIDENTIAL
Mr Wilford
Sir Duncan Watson
PS Mr Royle
Mute
Watson www./
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33/21
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33/2/11
HONG KONG MASS TRANSIT SCHEME
1. It is clear from Mr Aston's helpful telegram (CREDA No 12)
that the Hong Kong Government envisage two or three further
rounds of consultations. They have proposed that the first of
these with the UK consortium should take place in Hong Kong
from 19 March. The consortium have agreed to this. There will
then be a second round, also in Hong Kong, probably at the
beginning of April. The aim is a final submission to Executive
Council in May. This will lead both to the choice between the
consortium and tendering methods of construction, and also,
where appropriate, between the competing groups.
2. Both the Governor and Mr Haddon-Cave have now told us that,
although no decision has been taken, their preference is to go
for a consortium tender provided that the price is right. The
meaning of this proviso is, of course, crucial. At the same
time Mr Haddon-Cave has said that he will look for further
concessions on financing, particularly capitalisation of
interest and a reduction of the interest rate.
3. It looks as if the Franco/German and Italian offers are
still less refined than the British consortium bid and the
Japanese proposals are inferior in some respects. If this is
so, Mr Haddon-Cave presumably hopes to be able to persuade the
other groups to meet and surpass our proposals and to get the
/British
CONFIDENTIAL