J Butterworth Esq
HN
reasury
the rate current in August of this year, and holding it available for tenders made between then and May 1982 and orders placed between November 1981 and August 1982.
Capitalisation of Interest
15.
MTRC have received it
I seek your formal approval to offer this concession. before and the Japanese in particular we expect to be granting supplier credits in HK dollars as fully compliant tenderers.
Market Assessment
16. A detailed market assessment was given in connection with the Castle Peak case see Cotterill's letter of 25 July 1980 to Mountfield. We would not wish to amend that assessment at this stage. However, after taking account of the Castle Peak 'B' contract it is recognised that the Section 2 liability on Hong Kong now represents approximately 24% of the total current Section 2 AAR. Whilst we are confident about the market the level of Section 2 commitment may require a full review later this year.
Security
17. A payments guarantee from the Hong Kong Government.
Summary
18. Authority is requested for ECGD support to be given under Section 2 of the EG Act for this project on the basis of
(a) finance in Hong Kong dollars,
(b) 85% of UK supply plus 15% for locals where appropriate for the construction contracts,
(c) 5 years credit commencing from mid-1985 for the line of credit for consultancy services rendered under contracts placed during 1981 at 8% interest. Smaller hardware contracts to be financed at rates current during the ordering period 1 January 1982 to 31 December 1982,
(d) 8 years credit from the relevant commissioning dates in respect of the major construction and equipment contracts, at the Consensus interest rate current at the start of the tendering programme,
(e) capitalisation of pre-commissioning interest.
19. Your agreement to these terms will enable us to make initial indications to those UK companies who are now beginning to put together formal tenders. ECGD officials will discuss the project directly with MTRC in Hong Kong next month.
Yours sincerely
14
R Holloway
CC
E A Whitear
Tsy
M Haworth
T JH Downing
BOE
J Priston
GM Gowlland
FCO
J Woolmer
MOD(Sales) DOT(CRE4) DOI (MEE)
R Mathrani
DOT
D March
Hong Kong
G Leader
ODA
4.