From the
Minister of State
Rt Hon Alan Williams
CUNFDENTIAL
AKK buli
شا
for pps
ppl
Department of Industry
of
↑ Victoria Street London SWÍH OET
Telepho
RECEIVED IN PAGJJAY KO. 51
- 5 JUN 1978
Direct line 01-215 Switchboard 01-215 7877
130
泌
5747
fu
PA
REGISTRY |Action][aken
The Quanwi
26 May 1978
DECK OFFICER
IND X
No
The Rt Hon Joel Barnett MP
Chief Secretary
HM Treasury
Treasury Chambers
LONDON
SW1
HONG KONG PROJECT
I Thompson
81375
HKGD
ECPS
•.5. At PS/Ld. G. Robots
IPUS
Mi Cortazzi Mr Murray FED
TRED
Last September you authorised the provision of CEGB services and special ECGD cost escalation arrangements for power station contracts in Hong Kong. As you know our negotiations were successful. I was present in Hong Kong when a contract for the supply of 700 MW generating equipment, worth about £100m, was signed on 8 April. The Loan Agreement also includes provision for the supply of up to 300 MW gas turbines, worth about £25m at to-day's prices, and more than £10m worth of cranes, steel etc., from the UK during the coming year. These are valuable additional orders to the power station units.
We are now in the final stage of preparing proposals with GEC for a further 700 MW generating equipment (for which we have to submit proposals by the end of May). We are also developing proposals with Balfour Beatty for a new transmission system in Hong Kong involving contracts of up to £150m at to-day's prices. (This is quite different and much bigger than the original Lantau island/mainland link put forward with our original proposals because the site of the power station has now been moved to the mainland). We shall submit the transmission proposals to Hong Kong in August.
China Light and Power/Esso have indicated that if the prices for the next stage of the power station and the transmission system are acceptable UK companies will win negotiated contracts and CLP/Esso would not go to international tender.
I am naturally anxious that UK companies should obtain negotiated contracts. It was obvious to me during recent visits to the GEC factories at Trafford Park, Stafford and Rugby that the heavy electrical industry remains far short of an adequate workload.
1
CONFIDENTIAL