J Butterworth Esq HM Treasury
they have contacted us, but they tell me that they cannot get anywhere near a real estimate of the likely price, and will not be able to do so until they have put together their detailed tender. I have seen estimates of £30m for each of the 11 major tunnelling contracts, but this figure also must be treated with caution at this stage. The total value of the tunnelling contracts could be £330m which with the £80m for Taylor Woodrow gives an overall figure of £410m. Assuming that the UK element of these contracts might be as high as 50% - 75% then we face a possible maximum ECGD commitment of £200m £300m for the UK element and a further £30m - £45m if we provided support for local costs up to 15% of the UK element.
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Electrical and Mechanical Equipment
6. MTRC propose to split the E & M work into eighteen separate contracts:-
(a) Rolling Stock
MetCam will definitely bid, and have told us that MTRC have a firm requirement for between 100 and 150 unpowered cars worth about US$100m.
(b) Signalling System; Cable and Pipe Brackets
Westinghouse will bid for the two contracts worth about £15m in total.
(c) Other equipment contracts
GEC will bid for the power supply contract worth about £20m. An application from Balfour Beatty for contracts worth about £5m is also expected.
Consultancy Services
7. Lazards have made an application at MTRC's request for a line of credit for HK$100m principally for consultancy contracts which they say could range in value from £3m each for two or three contracts relating to tunnelling work down to about £1m. They have also asked that the line should be available to sweep up a number
of small hardware contracts.
Total Prospective ECGD Exposure
8.
A possible maximum loan value of £400m might arise:-
Construction contracts
Rolling Stock
Other E & M
Consultancy contracts
£300m
}
£ 50m
>
£400m
£ 40m
>
£ 10m)
In practice it seems highly improbable that more than half this amount will be won by UK tenderers. Assuming a loan value of £200m ECGD's liability would be about £300m spread over the next 12/13 years.
Terms Sought by MTRC
9. MTRC's prospectus contains the following:
1114. Currency of Payment
The required currency of payment for all contracts is Hong Kong dollars.
2.
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