CONFIDENTIAL
contractual arrangements between CLP/PEPCO, acting for the new company and for the suppliers of plant, could be maintained. The Prime Minister said that he would not rule out this solution. The Department of Industry would present the package in Hong Kong and would co-ordinate the UK input into the negotiations.
Sir Lawrence Kadoorie said that he had urged his own people to use and to heed British expertise and not to attempt to carry out themselves aspects of the contract for which they were not yet adequately qualified. But he had to bear in mind the need to avoid stifling local ambition. The Prime Minister said that we hoped to include in the package the provision of the services of the CEGB, both in design work and in providing staff to commission and operate the power station. Sir Lawrence Kadoorie agreed that this would be an important element of the package, not least with a view to training young Chinese personnel. Sir Lawrence Kadoorie said that the scheme of control was under active consideration between CLP/PEPCO and the Hong Kong Government. It was necessary to arrange for the agreed tariff to cover all foreseeable purchases of plant, rather than to have to seek frequent revisions of it.
The Prime Minister told Sir Lawrence Kadoorie that the full package proposal might not be complete as early as mid-August, but rather later. Sir Lawrence Kadoorie said that this should create no difficulty. He himself would be returning to London in September in order to keep in touch with all those concerned. He stressed once more the need for the UK to maintain the momentum by continuing activity, even if the package was not complete by mid-August. The Prime Minister agreed and said that he would give the necessary instructions; it was important, however, that the demonstration of continuing activity should not in itself become an excuse for delay in putting the package forward. The next step would be to talk to the Governor of Hong Kong about the financial aspects which Sir Lawrence had mentioned.
Finally, Sir Lawrence Kadoorie said that as Chairman of CLP, he was continually reminded of his responsibilities to his shareholders and to the public. Several of his directors were Chinese; if they were to approve the purchase of British plant without calling for tenders and if the Hong Kong Government were to be asked to support this (provided the cost of such plant did not exceed, say, 5% above that of recently accepted international bids for similar quipment) it was necessary to create an appropriately favourable climate. In this connection, Sir Lawrence said, relatively unimportant decisions concerning restrictions which would adversely affect Hong Kong's textile industry could give rise to criticism which, if it came at the wrong time, might upset the whole project. He hoped that the British Government would realise this and bear it in mind. As a free port, Hong Kong had no power to protect its own textile industry an industry which, Sir Lawrence Kadoorie added, accounted for no less than 40% of the industrial load of CLP/PEPCO. The Prime Minister said that he took note of Sir Lawrence Kadoorie's comments; Sir Lawrence would have read
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