PARA 7
CONFIDENTIAL
ARE SPENT. IF EXPENDITURE ON WORKS WAS LESS THAN THE
AGREED TOTAL BECAUSE OF DIFFICULTY IN SECURING AUTHORISATION THEN HONG KONG COULD NOT BE HELD RESPONSIBLE FOR ANY UNDER-EXPENDITURE.
NO COMMENT.
PARA 8 (A) WE SUGGEST INSERT
COMPOSITION OR BEFORE ''SIZE''
B) PARA 6 OF THE AGREED FORMULA FOR THE INFLATOR PROVIDES
FOR A REVIEW. SHOULD NOT THIS BE INCLUDED IN THE AGREE-
MENT?
(C) UMELCO HAS ALREADY INDICATED THAT IT ATTACHES IMPORTANCE TO THE RETENTION OF THE EXISTING REVIEW CLAUSE IN PARA 3(1)(C). THIS PROVISION WAS INCLUDED IN
THE CURRENT AGREEMENT AT A TIME OF ECONOMIC GROWTH AND
BUDGET SURPLUS. WE SHOULD FIND IT HARD TO EXPLAIN WHY
IT HAS BEEN OMITTED FROM A NEW AGREEMENT PROVIDING FOR
A MUCH HIGHER CONTRIBUTION IN MUCH MORE UNCERTAIN TIMES.
WE HOPE YOU CAN MEET US ON THIS. IT WILL NOT HAVE
ESCAPED YOU THAT WE HAVE NOT INVOKED THE CLAUSE.
3. IN THE LIGHT OF OUR CONSIDERATION OF YOUR DRAFT WE THINK IT
MAY BE HELPFUL FOR YOU TO HAVE AN ALTERNATIVE DRAFT EMBODYING
OUR PROPOSALS. THIS DRAFT (IN MIF T) ASSUMES THAT HONG KONG WILL NOT BE REQUIRED TO PAY MORE THAN 50% OF THE COST. IT KEEPS
AS CLOSE AS POSSIBLE TO THE EXISTING AGREEMENT AND RETAINS PRESENT
PRACTICES WHICH HAVE WORKED WELL. WE HAVE THE FOLLOWING POINTS TO
MAKE ON IT IN AMPLIFICATION:-
PARA 3 WE HAVE RETAINED MOST OF YOUR WORDING PENDING CLARIFICATION.
WE HAVE SEPARATED THE OPERATION OF THE INFLATOR INTO THE LIKELY 3 COMPONENTS OF THE AGREEMENT AND INDICATED HOW WE
UNDERSTAND IT WOULD BE APPLIED TO THEM.
PARA 5 WE HAVE SEPARATED MAINTENANCE AND MINOR WORKS FROM CAPITAL
WORKS.
PARA 6
WE HAVE RETAINED PARA 3(VI) OF THE EXISTING AGREEMENT
AND INCORPORATED PROVISION FOR AN AGREED PROGRAMME OF WORKS
TO WHICH WE REFERRED ABOVE IN OUR COMMENTS ON YOUR PARAGRAPH
6.
3
CONFIDENTIAL
/PARA 7