EXPORT CREDITS GUARANTEE DEPARTMENT
PC x No 272 Aldermanbury House Aldermanbury London EC2P 2EL
Telex 883601
Telephone 01-606 6699 ext.
Mr R E Adams
HM Treasury
Parliament Street
London SW1
Dear Bob,
Your reference
Our reference
Date
11 January 1982
HONG KONG MASS TRANSIT ISLAND LINE INTEREST RATE
We spoke over the telephone.
NR
EXPORT
CUARANT
CREDITS
DEPARTME
JALAN
In his letter of 31 July 1981 to Michael Hawtin, Charles Birch confirmed that the then current Consensus interest rates would be held until 30 June 1982 to match the MTRC's procurement programme as we then understood it. MTRC have been pressing us to extend this date to 30 September. Our initial reaction was to refuse a general extension of the date but to say that we would match the Japanese in any particular case where they offered to hold the old rate beyond 30 June. Norman Thompson of MTRC has now telexed Bob Kemp directly asking us to reconsider. He says that our refusal to agree an extension would place MTRC in real difficulty because MTRC will now be unable to complete their tender preparation and assessment procedures as well as allowing tenderers sufficient time to draw up proposals for the many contracts concerned, if this were done on the basis of fully competitive international bids in all cases.
I am unsure of the reason why MTRC's original timetable requires revision I suspect it is the result partly of mis-calculation and partly of the difficulty which arose with the early construction bids which have had to be re-tendered on a different basis from that originally intended, at the cost of several weeks delay.
Norman Thompson advises that if we remain unable to extend the date, MTRC will get round the problem by placing equipment contracts before 30 June on a negotiated basis with companies who are supplying equivalent equipment for the Tsuen Wan extension; thus avoiding the process of issuing and assessing tenders on a competitive basis.
I attach a list of the British companies who are known to have pre- qualified for equipment contracts, and showing details of the likely value of the UK content where this is known to us. So far as I'm aware the only companies on this list who bid successfully for contracts for the Tsuen Wan extension were Westinghouse Brake and Signal in respect of automatic braking and signalling equipment, and GEC Rectifiers who provided power supply equipment, the rest of the equipment contracts being placed mainly with the Japanese. If Norman Thompson proceeds on the basis of negotiated contracts for all the equipment contracts only these two British companies will be invited to negotiate, and the other companies on the attached list will be excluded from competing for business.