4. THE REPORT CONCLUDES THAT OUR PRICE IS ATTRACTIVE AND THAT
SUBJECT TO CLARIFICATION OF FOLLOWING POINTS, A SATISFACTORY CONTRACT CAN BE CONCLUDED:-
(A) THERE IS AN UNNECESSARY OPEN ENDED PRICE ADJUSTMENT FORMULA. A CEILING IS REQUIRED ON THE NUMBER OF YEARS FOR WHICH THE
EIGHT PERCENT COST ESCALATION WILL OPERATE TO PREVENT SUBSTANTIAL
INCREASE IN TOTAL PRICE IF SUPPLY IS DELAYED. AS NO ESCALATION
RATE QUOTED FOR UNITS 3 AND 4, SUGGESTED PRICE IS IRRELEVANT. (B) UK FINANCIAL TERMS ARE NOT UNIQUE AND COULD PROBABLY BE MATCHED BY OTHER SUPPLYING COUNTRIES BUT IT WOULD REQUIRE A QUOTE
GREAT EFFORT UNQUOTE TO DISCOVER WHETHER OTHERS WOULD PRODUCE
MORE ATTRACTIVE TERMS:
(C) DELIVERY PERIOD OF 40 MONTHS FOR UNIT 1 PLUS FURTHER
12 MONTHS FOR UNIT 2 COMPARES UNFAVOURABLY WITH OTHER
SUPPLIERS WHO CAN OFFER 30 MONTHS INITIAL DELIVERY. EXTENDED
DELIVERY COULD INCREASE OVERALL COST BY GREATER ESCALATION CHARGES
AND GREATER CAPITALISED INTEREST CHARGES DURING SUPPLY AND
CONSTRUCTION:
(D) GAS TURBINE PRICE LIES IN SAME RANGE AS COMPETITIVE
SUPPLIERS AND, AS NO ESCALATION FORMULA IS QUOTED, THIS SHOULD BE NEGOTIATED (COMMENT STONES SUGGESTS THAT AS CLP REALLY NEED 300MW RATHER THAN 100MW QUOTED, THIS AFFORDS OPPORTUNITY TO IMPROVE ON GAS TURBINE OFFER).
5. STONES COMMENTED THAT CLP HAD BEEN IMPRESSED BY FREIGHT
REDUCTIONS WHICH YOU HAVE NEGOTIATED. HE DID NOT REPEAT NOT RAISE QUESTION OF IMPACT OF CEGB STANDARDS ON OUR PRICES (PARA 5
OF YOUR CREDA 358). HE DID HOWEVER SHOW ME DRAFT COPY OF CLP
TIMETABLE WHICH HE IS ABOUT TO PUT TO SIR LAWRENCE. YOU MAY
WISH TO TAKE ACCOUNT OF FOLLOWING KEY DATES:-
(A) 26/27 NOVEMBER
(B) 29 NOVEMBER
(C) 2 DECEMBER
(D) DECEMBER
(E) 13 DECEMBER
GOLDSMITH OF ELECTROWATT ARRIVES IN HK FOR DETAILED DISCUSSION WITH CLP/PEPCO
PROJECT 77 SUB-COMMITTEE CONSIDERS
ELECTROWATT REPORT
CLP/PEPCO BOARD RECEIVES FORMAL PRESENTATION ON OUR PACKAGE FROM GOLDSMITH OF ELECTROWATT FORMAL BOARD MEETING OF CLP/PEPCO TO TAKE
DECISION ON OUR PACKAGE
ANNUAL GENERAL MEETING OF CLP AT WHICH
SIR LAWRENCE WILL HAVE TO DUCK QUESTIONS ABOUT HIS DEVELOPMENT PLANS.
6. SIR LAWRENCE HAS ASKED ME TO ACKNOWLEDGE YOUR LETTER SENT BY HAND OF BRROKS. HE HAS NO OBJECTION TO CONTRACTORS TEAM BEING AVAILABLE FROM 8 DECEMBER AND FULL TEAM FROM 12 DECEMBER BUT SCOCESTS THAT VOLL (AND YOUR WIFE) SHOWD. ARRIVE ON 16 DECEMBER TO