CONFIDENTIAL
152
014536
MDHIAN 3075
CONFIDENTIAL
FM BTC HONG KONG TO IMMEDIATE DTI TELNO OTTER 220
OF 220615Z NOVEMBER 91
AND TO IMMEDIATE FCO
INFO IMMEDIATE TOKYO
DTI (FOR PEP AND OT2/2)
TOP COPY
HKB 182/3 Q DIST?
MIPT. HONG KONG AIRPORT PROJECT.
SUMMARY
1.
IN RECENT TELEGRAMS I HAVE REPORTED SOME LOCAL UNEASE AT DEVELOPMENTS ON THE NEW AIRPORT PROJECT. I THINK THE CLOUDS ON THE HORIZON HAVE GROWN A LITTLE DARKER AND THEREFORE BEAR MORE ATTENTION. DISQUIET ON TWO AREAS, FINANCING AND CONDITIONS OF CONTRACT, ARE VOICED WIDELY IN SENIOR BANKING AND CONTRACTING CIRCLES. THEY ARE NOT, HOWEVER, REFLECTED IN ANY WAY IN THE VIEWS OF THE HK ADMINISTRATION, ALTHOUGH THE APPROACH REPORTED IN MIPT MAY PERHAPS SIGNAL A FIRST TOUCH OF THIS.
DETAIL
2.
TERMS OF CONTRACT. AS I HAVE REPORTED ELSEWHERE THESE ARE EXTREMELY VIGOROUS, TO THE POINT WHERE THE CHAIRMAN OF JOHN LAING INTERNATIONAL, HERE THIS WEEK, TELLS ME THAT NO MAJOR CONSTRUCTION COMPANY HAS EVER ACCEPTED THIS LEVEL OF RISK BEFORE, ANYWHERE, NOR HAS IT BEEN ASKED TO, AND HE IS VERY SCEPTICAL WHETHER MANY COMPANIES WILL IN FACT BID FOR THE MAJOR CONTRACTS UNLESS THE TERMS ARE ABATED. THE MANAGING DIRECTOR OF BALFOUR BEATTY INTERNATIONAL WHO ARE LEADING A GROUP WHO HAVE PREQUALIFIED FOR THE AIRPORT PLATFORM, ALSO VISITING HONG KONG THIS WEEK, SAID SOMETHING SIMILAR. HE SUGGESTED IT MAY BE DIFFICULT TO HOLD HIS GROUP TOGETHER BECAUSE SOME OF THE PARTICIPATING COMPANIES ARE VERY RELUCTANT TO SEE A BID GO FORWARD UNDER SUCH TERMS. THE CHAIRMAN OF MOUCHEL (BRITISH CONSULTANTS), ALSO VISITING THIS WEEK FROM THE UK BUT WITH LONG EXPERIENCE OF HONG KONG, TELLS ME HE HAS SERIOUS DOUBTS ABOUT WHETHER SUCH TERMS CAN BE IMPOSED OR IN THE EVENT BE MADE TO STICK, AND IN HIS VIEW THEY ARE LIKELY ANYWAY TO BE A RECIPE FOR SOME VERY HEAVY LEGAL BATTLES TO COME. I HAVE GENTLY SOUGHT TO
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