CONFIDENTIAL
this, and suitable appropriation in aid has also been assumed.
17. Despite adequate provision having been made in the forward costings
for replacement vessels, their place in the future programme cannot be
regarded as secure until the whole programme has been reviewed in the light
of our position in PESC.
LINE TO TAKE WITH THE HONG KONG GOVERNMENT
18.
Towards the end of this year it will be necessary to enter into forma).
communication with the Hong Kong Government in order to obtain their
agreement to proceeding with plans for the rercement vessels. It is proposed
to take the following line:-
a.
It is understood that the Hong Kong Government agree with the stated
role (paragraph 7), and that they agree in general terms that the 5
existing parol craft should be replaced by broadly similar vessels.
b. The broad order of capital cost of the replacement vessels is
likely to be M 15 to £M 20 which, it is hoped, will be acceptable to
the Hong Kong Government (paragraph 16).
C.
That on the understanding reached in February 1976, the Hong Kong
Government would pay 75%, and HMG 25%, on the capital cost, in line
with the terms of the DCA (paragraph 4).
d. That the replacement vessels would be the sole property of HMG
(paragraph 4).
e. That the capital cost comprises the full re-provision cost including
overheads (such as R & D, design work
) and that the
exact figure will depend upon such factors as place of build and detail ed
characteristics of the vessels.
7 CONFIDENTIAL
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