From the Minister of State
Alan Williams
CONFIDENTIAL
Bryan Cartledge Esq
Private Secretary to the
Prime Minister
WHITEHALL
London SW1
10 Downing Street
Dear Bryan
HKQD
CLPC
ps/hord
Department of Industry
Millbank Tower
London SWIP 4QU
(W/228
Telephone Direct Line 01-211
Garonwy-Robart's
HKK 16x
PS/PU =
McCortazzi
INDEX
3688
Switchboard 01-211 3000
FNOW 77 31 October 1977
REGISTRY
PAA Indices fupps
Mr. Stewart
n/x
I have a wasty feeling that this is too optimistic
HONG KONG POWER STATION PROJECT
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As you know a Government/industry/merchant banking team, led by the Department of Industry, had four days' discussion in Hong Kong last week with China Light and Power/PEPCO. This letter sets out the main points which arose.
The discussions went as well as could have been expected. There is clearly a mood on all sides in Hong Kong to make a success of the exercise, and the main principles of our proposals appear to have been well received. CLP/PEPCO recognised that our proposals were not put forward as a basis för negotiation and that if additions to the package were proposed eg, an extension of the role of the CEGB the price of the package would be higher. During the discussions CLP/PEPCO agreed to allow their technical staff to come to the UK for detailed talks on the power station design with the CEGB and the companies mainly involved.
Nevertheless, it is clear that our hopes of obtaining a negotiated contract depend upon CLP and Exxon satisfying themselves that our proposals are broadly competitive when compared with the prices that might have been put forward by Japanese or German companies. CLP and Exxon have asked Electrowatt, a Swiss firm of consultants, to advise them by the middle of November on the competitiveness of the British package, including the CEGB services. During last week's discussions, this Department was given permission to make an informal approach to Electrowatt, in the hope of ensuring that the consultants make a realistic assessment of the value of the
If overall services which are being provided for this contract. the Electrowatt report is sufficiently encouraging, we hope to
I understand agree a Letter of Intent with CLP/PEPCO by Christmas. that the Exxon decision will rest with its US board. I shall, of course, keep you fully informed of developments.
CONFIDENTIAL