EXPORT CREDIT
BRIEF
RESTRICTED
BRIEF 12
PROJECT BUSINESS
1
Hong Kong has been an exceptionally active buyer credit market over the past two years with UK companies, greatly assisted by HMG, obtaining exceptionally large orders in the power generator, transmission and rail transport fields. The Chairman of China Light and Power (CLP), Sir Lawrence Kadoorie, gave the UK the opportunity to achieve a negotiated contract for a 2 x 350 MW dual fired power station which was to be owned by a newly formed buyer, The Kowloon Electricity Supply Company (KESCO) in which CLP had a 40% interest the balance being held by ESSO. GEC secured a £145m contract in April 1978 and subsequently obtained orders for six Gas Turbines worth a further £30m. Recently KESCO have excersied an option to purchase 2 further 350 MW units costing £125m and in March 1979 Balfour Beatty secured a contract from CLP for a £100m transmission line. ECGD liabilities on this group currently total £640m (including interest). Moreover, CLP now plans to purchase up to 4 further 660 MW coal fired generating units valued at £640m. GEC have asked for ECGD support for their bid for this business. which they hope will be negotiated exclusively with them. If the contract were awarded to GEC, ECGD's liability on this further contract (including interest) could exceed £1 billion. The scale of commit- ment poses particular problems for ECGD who will need to seek adequate security from CLP. The case is at present under discussion at official level amongst interested Whitehall Departments but at this stage no indication can be given as to the terms on which ECGD support might be available. The commitment on this further business would bring ECGD's total liability on this group to £1,760m and on Hong Kong as a whole to £2, 250m.
2
ECGD has recently provided buyer credit support for the export of 300 double decker buses in CKD form to the Kowloon Motor Bus Company. It is hoped that this company will satisfy