0003160 G.F. 316
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à revision of the price ceiling from
$5 billion to $6 billion together with
provision for price escalation.
3.
The Provisional Authority could
not accept this request. It holds the
view that the Consortium should have
been able to assess the effects of the
oil crisis on Japan's economy during the
period between the Hong Kong Government's
acceptance of its pre-emptive bid (11th
December 1973) and the time it signed
a Letter of Intent (15th February 1974).
The Provisional Authority therefore
considers that the Consortium has
committed a serious error of judgement
which will result in Hong Kong suffering
at least a year's delay in building the
Mass Transit Railway with all the
attendant consequences.
The Provisional
Authority holds the view that Hong Kong
should not have to suffer from this
error of judgement and it accordingly
lodged a claim for compensation with
the Consortium. At a meeting held on
9th January the Consortium refused to pay
compensation, but offered a nominal ex
gratia payment of ¥300 million
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