DR PIKNCE & PLAFRINO DIVISION
R Jones Eag HK Treasury LONDON 961
4 July 1973
xt 3649
1138
HONG KONG BASS TRANGIT SYSTEE
I am writing in support of the proposals in Ken Cotterill's letter of 2 July. I do not need to recapitulate the reasons why we regard the gaining of this contract98r outstanding importance to British industry. If we fail to get it, I think it is no exaggeration to say that we shall be out of the enormous market for urban rapid trungit business throughou§ the world. All this was spelt out fully in our original paper on the subject.
On the starting point for repayment of principal, it seems to me that we are now committed to the Group's proposal rightly in view of the competition - and there can be no going back on that. We are not yet committed on capitalisation of interest, but it is clear that others are and we cannot afford to be behind in a facility of this importance. We should therefore be prepared to match on this too.
I am a little concerned about the timing. we do need a decision by the week-end. If you think that BCCD's proposals will be accepted, then your timetable for comments by noɑn on Friday is probably all right. But if there is a possibility that Kinisters may have to discuss it then I think that Departments should comment at once so that the necessary arrangements can be made.
Finally, you may be interested to know that steps to set up a joint company to provide the Hong Kong Government with a single contractor have already been taken, and Hugo Kindersley told yesterday that he foresaw no problems.
Fa olaves-" mith
ce Fr o P Finlayson
Wise # J Lackey
FCO DTI
MP K Cotterill #COD
TEL
Kr L 1yan Bank of England MPC Stuart FCO
kr TJ Wilshire ODA