JAPANES FAVOURED
Hongyong Standard 12/12/73
FOR TUBE
A CONSORTIUM of Japanese companies, led by Mitsubishi, is likely to build the main part of
Negotiations to start on
Hongkong's 32-mile the $5,000m mass transit
underground system.
railway
Final negotiations are to begin immediately between the Government and the Japanese group, represented locally by Jardine Matheson, to conclude the contract.
But a government spokesman last night said a final conclusion would depend on the consortium's ability and willingness to conform to the Government's detailed requirements for a contract.
One of the most important conditions is that the contract price for building and equipping the tube's. first four stages should be limited to $5,000 million, he said.
"This was because it was considered that this was the maximum sum the railway could afford within a given fare structure and bearing in mind the long period over which the debt has to be repaid, resulting in a very heavy interest burden", he said.
"The Japanese consortium's proposal was the only one which was within this
limitation"
-by Tony Bugay
www.
The spokesman said that if negotiations failed, consideration would be given to negotiating with one or both of the other consortia the Anglo-Italian group represented locally by Hutchison International and the Anglo-French- German consortium by Hongkong Metro constructors.
**This decision has been taken following a series of discussions which have taken place between the Mass Transit Steering Group and the three consortia, which had put forward single contract. proposals", the spokesman said.
NEGOTIATIONS
He stressed that the forthcoming negotiations with the Japanese would take a number of months.
The decision has come as some surprise since
until last night the combined British-Italian consortium, represented by Hutchison had been tipped to win the contract.
Reliable sources said that this group
had tendered for less than $5,000 million, but that unlike the Japanese had declined to give a guarantee that costs would not go up in future.
Sir Douglas Clague, chairman of Hutchison last night said: "If we are approached by the Government again, we will reconsider the matter".
Some business quarters described the target of $5,000 million to build the tube's first four stages, which will take, seven years to design and build, as difficult to meet.
It is believed that all the consortia bidding for it with the exception of the Japanese - had refused to give a guarantee that the costs would not go up in future.
"The guarantee is impractical", one business Source said, and the other consortia had submitted tenders that carried a built-in provision for escalation of costs.
Despite official explanation on why the Japanese were favoured the decision is viewed by observers as a rebuff to London at a time when Hongkong is complaining about its sterling reserve and Common Market treatment by Britain.
"It's difficult not to read some politics in the decision. It's like telling London that this could be an indication of thing to come unless it pays more regard
Hongkong interests in future. one observer said.
The first four stages, known as the Initial System, will extent 12.6 miles with 20 stations joining Western Market on the island to Nathan Road in Kowloon, and branching to Kuntong, Tsuenwan and Laichikok. Further stages will be added later to complete the 32.7 miles long tube.
When contacted at his home in Tregunter Mansions at 1.30 am today, Mr Henry Keswick, chairman and senior managing director of Jardine Matheson told the Standard: "The Japanese consortium has made a very firm offer which has been accepted by the Hongkong Government. The contact is now going to be negotiated in detail. That's the situation."
Mr Keswick, who said that be was aware of Government aanouncemeat before it WAS publicly announced, said that he felt very confident about the final stages of the multi-million-dollar deal. He said: "I feel that it is very likely that there will be a contract in a couple of months."
Mr Keswick indicated that Japanese experts will probably be sent in to start work on the mass transit system.
He said that he personally will not take part in the final part of the negotiations.
very
"I honestly feel that these are obviously carly days," said Mr Keswick, “but We are pleased to be in a situation to negotiate with the Hongkong Government on behalf of the Japanese consortium.”