29
EXPORT
GUARAN
CREDITS
ANTEE
DEPARTM
R Jones Esq HM Treasury
HILK. 21/4
Great George Street London SW1
Dear Ronaldin
'217
(220)
(222)
EXPORT CREDITS GUARANTÉE DEPARTMENT
Aldermanbury House
Aldermanbury
copy to Mr Finlays
+20/07
London, EC2P 2EL
Your Ref 2F(E) 17/68/01
Our Ref BC/C 35/1
24 September 1973
I have written to Mr Jones
to tell him that, from
FCO point of new this
is not the moment
HONG KONG MASS TRANSIT SYSTE
the hunt
the
PA
2
271x
1
From your letter of 19 September it would appear that you have not seen an account of the last meeting which the British group had with the Hong Kong Steering Committee in London on 30-31 August last. The Steering Committee have seen all four groups and have obtained the latters reactions to the Committee's conditions. These required that the total cost of the first four stages be not more than HK$5,000m. It subsequently appeared that this figure was the maximum capital cost which, according to the Hong Kong people's estimate, the system could bear given certain assumptions, acceptable to Hong Kong, about running costs and charges.
I had discussed this with Lazards before the meeting, which I was not able to attend, and had made the point that although much of the Hong Kong authorities figuring was obscure (I have never seen it in detail, though I think FCO are aware of the details) it could be argued that on the basis proposed the scheme did not meet our tests of viability. This was reflected in Lazard's contribution to the British Group's response to the Hong Kong proposals, as at Appendix A attached. At the meeting between the parties the matter was discussed as the minutes at Appendix B make clear; particularly 2(c) and paragraph 7.
All this is likely to prove academic. The Japanese are said to have put in a pre-emptive bid, accepting the Hong Kong terms, while the two European groups are believed to have undertaken to accept them. The British civil contractors will not accept them, and the British group must be seen to be trailing badly in the race at present. I can see little purpose in these circumstances (which are rather fluid) in going back to Ministers. The time to do that may be if a new proposition emerges; in some respect it must assuredly do so if the British group are to remain associated with the project at all.
Kim Collell
K W Cotterill
cc F W Glaves-Smith Esq DTI
M A Goodfellow Esq FCO
AL Ryan Esq Bank of England