OVERSEAS FINANCE & PLANNING DIVISION
231
CONFIDENTIAL
R Jones Esq
HI Treasury Treasury Chambers Gt George Street LONDON SVLP 3AG
Ext 3649
4 October 1973
(222)
HONG KONG MASS TRANSIT SYSTEM
Thank you for sending me a copy of your letter of 27 September to Ken Cotterill. I enclose copies of the notes of the meetings of 30 and 31 August between the British group and the Hong Kong Steering Committee.
We have heard that the Japanese consortium has made a "pre-emptive bid", which must presumably come within the 75,000m ceiling set by the committee. If the bid is acceptable to the committee they will allow the other consortia thirty days in which to put in counter-offers.
Because the British civil contractors reject the ceiling price condition the British group cannot by itself make a realistic counter-offer. They have approached the Italians with the suggestion that the two groups join in making an Anglo-italian bid in which the British would lead on the mechanical/electrical side and the Italians on the civil side. The Italians are keen on this but as their financing terms for the civil content are not as good as those for the mechanical/electrical side they say they need to off-load at least 30% of the civil content to the British contractors in order to keep to the financing terms they have already offered. But the British contractors are unwilling to take a share of this size on a fixed price basis. The two sides are now trying to find a way round the problem.
PW Glaves-Smith
cc K W Cotterill Esq CGD M A Goodfellow Est FCO AL Ryan Esq Bank of England
without enclosure