CONFIDENTIAL
be purpose-built for the Hong Kong task) and in such circumstances for the
Hong Kong Government to regard the vessels as their property, it has already
been agreed (paragraph 4) that costs (capital and running) will be shared
on the same basis as those of the remainder of the garrison, i.e. 25%
by HMG and 75% by the Hong Kong Government. HMG's ownership of any replacement
vessels should, thenfore, not be in any doubt their status being on a par
་་
with that of any other capital equipment, such as helicopters, provided
for the garrison during the currency of the DC. The Royal Navy would thus
acquire several new vessels, with an expected life of 20 or more years, at
25% of their capital cost, with 75% of their running costs paid for so long.
as they are required to operate in Hong Kong vaters. (Should they in fact
be purpose-built for the Hong Kong task, then the question of their disposa?
in the unlikely circumstances where it was decided that the Royal Navy would
no longer operate 'in the Colony would be a matter for negotiation between
the two Governments.)
15. It is therefore recommended that the cost-sharing basis to be proposca
to the Hong Kong Government should be the 75/25 apportionment, although we
shall need to ensure that both we and they are quite clear as to what is the
total cost to which they are being asked to contribute three-quarters. Running
costs should be relatively simple to assess, in that we have the existing
basis to rely or, but capital cost would include a number of overheads
(e.g. R & D, design work, overseeing) the scale of which would depend upon
whether they were 'off-the-shelf' or of new design, where the vessels were
to be built, and other such factors.
16. Because it is not yet possible to determine precisely the type and
location of build, neither is it possible to put more than an order of capit:1
cost upon the replacement. Assuming that the replacement was to be 5 new
patrol craft, however, the capital cost would be likely to be in the range £ 15 to £M 20. Provision has been made in our forward costings to cover
6 CONFIDENTIAL