financial well-being of Lan Tau Electric which would be a monopolistic public utility upon whose services many of the banks' biggest industrial customers depended. Mr Birch would be making his own report when he returned to the UK following his further talks about the Scheme of Control. He had left the first draft of a loan agreement with the Hong Kong Bank.
8 Mr Lippitt said that the next step would be to obtain the necessary approval in principle for the proposals agreed in Hong Kong from the Treasury and the Bank of England. This would be sought at the same time that companies were preparing their final tenders.
Form of the package
9
GEC announced that following recent discussions with Babcock and Mouchel they had agreed to a revised arrangement for bringing together the main elements of the power station. Details were given on a telegram which had been copied to the Department. Basically the arrangement provided for GEC to act as main contractors with Babcocks and Mouchel associated as sub-contractors. GEC foresaw no problems over joint and several liability.
10 This new arrangement had been prompted by increasing anxiety over the difficulties of co-ordinating a package comprising entirely separate contracts. This problem had been made more complex by the introduction of the offer to include civil design. As lead contractors GEC would offer to take on the project management only as far as it related to supply from the UK. The bid could however make clear to CLP/PEPCO that UK companies were willing to consider taking on some project management responsibilities in Hong Kong eg civil building works, plant erection, project management on site, if required. The bid might also make it clear that UK companies were prepared to consider an alternative form of package if CLP/PEPCO were not satisfied with this arrangement.
11 In discussion it was agreed that GEC, Babcock and Mouchel should proceed in this way. The elements of the project to be covered by Balfour Beatty and the CEGB could
be added separately to form the complete package. There
remained the problem of CLP/PEPCO's aversion to turnkey projects involving lead contractors: it was felt that the revised arrangements did not fall into that category. It was also agreed that the GEC package would be covered by a single overall price expressed in both f.o.b. and c.i.f. terms.
Timetable of future work
12
The details set out in GEC's telegram provided for the GEC package to be submitted to the Department by 31 August. This would include the examination of the tender by RTZ. It was agreed that the other elements of the package should be co-ordinated with a view to presenting the UK proposals in Hong Kong during the second full week in September.
RYM.
PG MOULSON
IC2
12 August 1977