DEPARTMENT OF TRADE 1 VICTORIA STREET LONDON SWIH OET
:
RE
8617/~ 38
Telephone 01-215 7877
HKR 173/3 40. ST
NO. 51
Confidential
Andrew Duguid Esq Department of Industry Ashdown House
123 Victoria Street London
SW1P 3EB
From the Secretary of State
TREO
Ps/Mr Jucheri Ps/pus
m. Buter
Cortezz
Mr Thomas
ALGO
OFFICER
Action Tuse
See
ㄓ
143
17 November 1978
Dear Andrew,
KOWLOON-CANTON RAILWAY: ELECTRICAL MULTIPLE UNITS
Your Department has taken part in discussions about the bid by Metro- Cammell Limited for the important order for electrica multiple units for the Kowloon-Canton Railway (Hong Kong Section), which is thought to be £8 million too high, if the contract is to be secured.
As a result of these discussions the company contemplate reducing their own immediate costings by £2.85 million. In addition Departments have found ways in which the company could be assisted which would in turn enable them further to lower their price. The figures are:
ECGD
£0.6m
Department of Industry £1.25m
Department of Transport £3.3m
The ECGD clement represents the effect of bringing forward a planned change in their policy which reduces from £3% to 1% the first loss by exchange which a firm has to bear under the tender to contract scheme. The Department of Industry element is in the form of a 25% grant to an eligible research and development project. The Department of Transpor- item is for a research contract.
In
The company will thus be able to reduce its bid for the contract. order to enable this to be considered by the purchaser, my Department has been asked to convey an assurance, on behalf of HG, to the Hong Kong Government that the Metro-Cammell price will not exceed £44.4 million. We are in touch with the company so that they produce their assurance to this effect. But before we convey it to the Hong Kong Government I should be grateful for confirmation that the arrangements