CODE 18-77
Mr Royce
ED/DOT
CONFIDENTIAL
Reference..
Kr Priston
Mr G M Gill
CRE4/DOT
HH Treasury
Miss J Kelley II Treasury
1r Stephens
ECGD
Kr Fishpool
ECGD
HKK 13/200
RELOVEC
TRY NO. 51
13 NOV 1978
Mr Breach
ECGD
Hr Thompson
FCO 20)
CFFICER
REGISTRY
Mr Dell
M/DOI
INDEX
PA
Acti
iir Shilson
Bank of England
مار
Sup
HONG KONG: KOWLOON RAILWAY
213/11
川
We have been looking over the last week at ways of assisting Metcan to reduce their price for this contract to the level of their principal competitors. Despite all our efforts and after the companies have shaved margins a gap of
3 remains.
Two ways have been suggested for using ECGD facilities to achieve this:-
work which the
(a)
setting up a buyer credit/difference between the fixed rate and current market rates would accrue to Metcam and thus enable them to reduce their price.
(b)
giving Tender-To-Contract cover on the HK to US exchange risk.
However,
As to (a), the Hong Kong Government has asked for bids on cash terms. Hetcan UK could have a contract to supply the goods on the basis of buyer credit with a party outside the UK who could on-sell on cash Terms to the Hong Kong Government. Having pondered over Section 3 of the Export Guarantees Act 1975
I find it difficult to see that such a scheme could be "ultra vires". I would be grateful if ECGD could explain as soon as possible.
As to (b), having had various conversations with ECGD and Mr Shilson in the Bank, I have produced a probably over-simplified, analysis of the proposal. My Secretary of State has asked for more details of this proposal and I would appreciate comments on the draft note by the close on Monday 13 November.
N Oldham
Room 162 V/S 215-3233
November 1978