CONFIDENTIAL
175
(a)
The Japanese are still requiring a Government guarantee of the borrowing, and you are resisting them. I know that you realise that there is no question of meeting the Japanese on this. (Incidentally, I wonder how far the other two consortia have taken on board the distinction between the Government and the MTR Corporation?)
(0) I see that the Anglo/Franco/German consortium have said
that they can offer 12 years repayment, to start after completion, an amount of credit which looks at least 100% of offshore procurement, and can match capitalisation of interest. So far as the British element (GKN) is concerned, I should tell you that they have no authority whatsoever to offer any of these things. On the contrary, they have been expressly told that they can expect only normal ECGD terms and that all these four concessions are exclusive to the all-British group.
(c) We have asked the Italian State Credit Institution
whether they are backing the terms offered by the Italian Group. They have told us that they have not yet even been approached by them. You may want to probe this since, from experience on other projects, we doubt whether the Italian Government would be willing to finance a contract of this size.
4. Finally, I note that your letter of 1 August to the British Group does not refer to two matters completion in 5 years, and minimising labour requirements - to which you appear to attach some importance. If you wish to press these points, no doubt you will take them up in the discussions at the end of the month.
5. In case this should miss you in Hong Kong I am arranging for a copy to be sent to you at the Hong Kong Government Office here.
Yours
ever,
Michael Wilfor
K M Wilford
P.S. & cope
may meet if
You can spare
a moment.
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CONFIDENTIAL