HOFO C29/22
O DO I DESKBY 22092ZZ
GRS 560
HKK 173
CONFIDENTIAL
PA
DESKRY 220980Z
No
FM BTC HONG KONG 220938Z JAN 79
TO IMMEDIATE D O I
13
площашом
3/1
inking. Calid by
Filephone)
TELEGRAM NUMBER INDUS 17 OF 22 JANUARY
FOR LIPPITT, DEPUTY SECRETARY.
هر
MY INDUS 12 AND 16: MASS TRANSIT RAILWAY AND KCR CONTRACTS.
FOLLOWING PROPOSALS FOLLOW DISCUSSIONS WITH DAVID GEMMILL WHO SPOKE
TO YOU LAST NIGHT ON THE TELEPHONE 1-
1. METCAM IS IN DIFFICULTY ON KCR AS THE BUYER DOES NOW WISH
TO MAKE PROGRESS PAYMENTS AND METCAM CANNOT DO WITHOUT THEM, THE PWD HAS HITHERTO REJECTED AN ECGD SUPPORTED BUYER CREDIT LOAN,
2. GEMMILL NOW SUGGESTS THAT A SUPPLIERS CREDIT MECHANISM DURING THE CONSTRUCTION PERIOD MIGHT PROVIDE AN ACCEPTABLE COMPROMISE AND I WOULD BE PREPARED TO PUT THIS TO THE HONG KONG GOVERNMENT AT
THE HIGHEST LEVEL. THE PROPOSAL IS THAT INSTEAD OF PRESSING FOR PROGRESS PAYMENTS, WE SHOULD ASK THE PWD TO AGREE TO PAY METCAM INTEREST AT ECGD RATES ON SUMS WHICH WOULD OTHERWISE BE DUE AS - PROGRESS PAYMENTS. THE CONTRACT IS IN STERLING AND FINAL DELIVERY
IS FOUR YEARS AFTER CONTRACT SIGNATURE. GEMMILL IS NOT SURE WHAT RATE OF INTEREST ECGD WOULD REQUIRE. CLEARLY EVERY EFFORT SHOULD DE MADE TO KEEP IT AS LOW AS POSSIBLE SO THAT THE MAXIMUM BENEFIT
CAN BE MADE AVAILABLE FOR INCORPORATION IN OUR MTR BID.
3. MY CONVERSATION WITH BENJAMIN ON SATURDAY INDICATED THAT CHANCES
OF ADEQUATE FURTHER SUBVENTION FOR MTR ARE SLIGHT. THIS CONTRACT WILL BE LOST IF WE ARE UNABLE TO MEET IN FULL THE CORPORATION'S REQUEST THAT WE MATCH THE CANCELLATION OF INTEREST
OFFERED BY THE JAPANESE FOR THE PERIOD ENDING 31 DECEMBER, 1982,
4. GEMMILL FURTHER SUGGESTS THAT ECGD MIGHT AGREE TO THE ENTIRE MTR LOAN SUM BEING DRAWN DOWN IMMEDIATELY THE LOAN AGREEMENT IS EFFECTIVE WITH THE PROCEEDS BEING INVESTED IN PRIME BANK CERTIFICATES OF DEPOSIT OR GOVERNMENT PAPER. THE DIFFERENTIAL BETWEEN THE INTEREST WHICH COULD BE EARNED IN THIS WAY AND THE