CONFIDENTIAL
- АКК 164
No
From the Minister of State
Alan Williams
2
164/1940
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Department of Industry
Millbank Tower
London SWIP 4QU
Telephone Direct Line 01-211
Gorowy-Roberts
Ps/qu Mi Cortazzi AITHurray
FED
TRED
3688
Switchboard 01-211 3000
31 October 1977
1228
Bryan Cartledge Esq
Private Secretary to the
Prime Minister
10 Downing Street WHITEHALL
London SW1
N. Steput
As Thompso
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n/x
The euphoria of this letter reads
oddly after the initial reports that the
Hong Kong side had been disappointed by the
Dear Bryan
was
#
high prices being asked by the Britial team - not to mention the reports that the goodwill that is vital to our chances
• being serously undermined by MFA and all that. I. fear that the Mills
may be deluding himself. W. Chantill's
HONG KONG POWER STATION PROJECT
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 for 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 overall services which are being provided for this contract. If the Electrowatt report is sufficiently encouraging, we hope to agree a Letter of Intent with CLP/PEPCO by Christmas. I understand that the Exxon decision will rest with its US board. I shall, of course, keep you fully informed of developments.
In mued muld DOI to whom I spoke today was much less confident
Jeels
CONFIDENTIAL