CODE 18 - 77
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Reference
provide this consultancy with the likelihood of the Japanese being the. main suppliers of hardware. Although, therefore, Transmark as consultants could not properly divulge all the information Mr Smith had given me, he felt that in the national interest he had to supply it and had to express the hope that, on the one hand, something could be done to assist Metro Cam to reduce their price and, on the other, to persuade the Hong Kong Government to delay the taking of a decision.
I told Mr Smith that we were, in the light of information we had already received from Metro Cam and Mr March, looking to see whether there was any help that the Government could give to Metro Cam. I thought we would not wish to put Mr March in to ask the Government of Hong Kong to delay a decision until and unless we were in a position to plead that Metro Cam could bring their price down.
In parallel with this discussion, ECGD have been looking at problems arising on the latest proposals for better financial terms for Metro Cam's bid on the mass transit proposal. They will also be looking at the problems of the Hong Kong Kowloon railway and will be represented at the meeting which we are to have with Mr Gardiner of Metro Cam at 16.00 hours tomorrow.
DoI tell me that Sir Peter Carey has agreed to receive Mr Sansome of Metro Cam at 10.30 hours tomorrow. Mr Oldham will be present and ready to report the outcome. DoI would prefer that Sir Peter should take note of what Mr Sansome has to say and not himself attempt to organise a discussion given our intention of a meeting with Metro Cam later in the day.
As a commentary on the foregoing, I gather that there could be some possibility of arguing that the Japanese bid was not wholly reliable. The yen could appreciate and one might be faced with the sort of thing that happened over the original mass transit bid. I would guess that if the Hawker Siddeley price does not include proper provisions for escalation then anything else apart it may well prove non-compliant. This suggests that, as we had suspected, we are really looking at competition between the European 50 Cycle Group and Metro Cam. Expressed in sterling the difference between their prices would appear to be some £7m.
Mr Gardiner when I spoke to him on Friday seemed to think that in one way or another Metro Cam themselves might be able to bring their price down by between £2-3m. The balance still looks formidable against any- thing that I have yet heard about the possibilities open to ECGD or the DOI.
DN ROYCE
ED
V/207 ext 5701
6 November 1978
CONFIDENTIAL