**
Reference
8.
The British Group were nevertheless on the defensive on this issue. Neither GEC nor the Civil Works consortium are willing to accept joint and several responsibility. The civil works consortium's Target Price formula for their contract was also the subject of some difficulty. The watchful attitude of the civil works consortium springs from their uncertainty about a number of features of the work involved which have not been adequately explored. The other consortia might have been more adventurous in their willingness at this stage to commit themselves.
9. There seems to be little difference in prices and the Steering Committee showed no sign of finding the British Group's prices unacceptable.
10. Financing. The British Group's financing proposals appear
to be more detailed than those of others. On the other hand certain of our competitors have gone further in their export credit proposals than we have. In particular:
a.
The British Group proposes that repayment commences on completion of the first four stages.
Mr Lau Wah-Sun the accountant on the Steering Committee assured us that one competitor had gone further than this (in the form of a grace period. after completion). Another was on the same basis as ourselves; the third had not yet gone so far.
Two consortia have offered capitalisation of interest on the basis that precompletion interest will be repaid on the same terms as the capital repayments. The Financial Secretary assured us that one consortium (? Japanese) had notified him of this in writing while a second had given him an oral promise in terms which he accepted as binding.
11. I have promised to let the Hong Kong Government know what we can do about capitalisation within a week's time or so. Any decisions which we take must be taken quickly, since by mid-July the Steering Committee will have arrived at its conclusion. Any action to support the British Group's position must now be taken as a matter of urgency if they are to remain in the running.
Mittal
K W Cotterill 2 July 1973