MOTE OF A MEETING HELD IN MR KEMP'S ROCH ON 17 JUNE 1977
her. March
Received 27 July!
PRESENT:
Mr R T Kemp Mr F C Mann Mr J E Elliott )
>
) ECGD
Mr N Thompson
HKMTRC
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HONG KONG MASS TRANSIT PROJECT
Mr Thompson explained that the next phase of the Mass Transit project would involve construction of the north-west spur extending to Tsuen Wan West. viability of this portion of the project had been demonstrated in a feasibility
The study completed in March and a reccomendation to proceed had been submitted to thu Tyecutive Committee of the Goverancnt. eir decision, which was expected
to be favourable, would be made during July.
2. The cost of the Modified Initial System had divided roughly in the proportions of one-fifth for the electrical and mechanical contracts and four-fifths for the civil engineering. The cost of the north-west spur would divide roughly in the proportions of one-third E &i and two-thirds Civils. cost, grossed up to include escalation at 7% per annum,
At 1975 prices the total is estimated at the equivalent of £240 million. It is intended to raise half of. this sum in the form of export credits and the other half in commercial loans.
3. The- timetable for this next stage of the project is expected to involve tenders by the end of 1977; negotiations during Karch - June 1978;
commencement
of the Civil Engineering contracts in mid 1978; and completion at the end of 1982. The Contractors and Suppliers involved in the Modified Initial System will obviously be favourably placed for winning the new contracts and it is not expected that many, if any, new names will appear in Stage 2. The MTRC are satisfied with performance so far of all parties involved in the Modified Initial system and intend to invite tenders for Stage-2 only from Germany, Japan and the UK.
4. Met Cammell, provided they quote a reasonable price, are virtually assured of business for the 220 additional EMU's which will be required for Stage 2 of the project (the existing contract, which is for 140, includes an option on a further 70 which leaves 150 as the scope of the new contract). try to exploit their most favoured position, MTRC can and will turn to Japanese
However, if Met Cammell suppliers.
5.
Mr Thompson, having explained the background, said that his object at this &tage was to ascertain whether ECGD support would be made available as before and to enquire whether a fresh loan would be available in Sterling, if possible this time without the guarantee of the Hong Kong Government.
6. Mr Kemp explained that several of the rules had changed since the loans for the Modified Initial System had been raised. ECGD Guaranteed lending would now 'necessarily involve US dollar and not sterling lending but this need not be regarded as an unpleasant requirement in the sense that the interest rate (currently 7 fixed) would be lower than for sterling lending and use of the forward market would enable suppliers to reduce their prices. The maximum credit period would now be 83 years (instead of 12) as the result of the consensus reached amongst international credit insurers. The percentage of lending would be unchanged at 85% of the UK export content of contract prices.
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