CO129-611-1 Hong Kong Electric & China Light & Power Company Ltd. 1-12-1945 - 2-5-1947 — Page 4

Register No.

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Minute Sheet No.

the military administration got their business running and operated it without cost to themselves for the necessary period. Any question of the shareholders' rights regarding dividends does not seem to arise because the Companies assure us they are going to use the proposed payment of "rent" for a long term rehabilitation scheme. It seems to us that any payment of this sort should be dealt with as part of any claim which the Company may make for "reparations" on the same basis as any other private concern may claim in Hong Kong

4. If the decision had rested with the War Office, therefore, we should have proposed to inform Hong Kong that for the reasons given in the above paragraphs, we were opposed to the payment of rent, and that under the conditions following the re-occupation of Hong Kong, an agreement under which the Administration bore the net costs of starting these plants and maintaining essential services for the difficult initial period would have been fair to all concerned, In view, however, of the transfer to civil government, the War Office is not strictly concerned with the decision regarding the payment of rental, as, under the arrangements agreed with the Colonial Office and the Treasury, all payments made after the date of hand-over will be the responsibility of the civil government. We think, therefore, that we must leave it to the Colonial Office to decide whether to press the views set out above, or to accept this as a commitment against civil government funds.

5. In this connection, we suggest that, apart from Clause 6, the references to the "Military Administration" in the Agreement should be suitably modified to make it clear that the civil goverment will inherit any liabilities of the Military Administration under the Agreement. Similarly, any earnings accruing after the date of hand-over will be credited to the civil government..

6. As regards the suggestion in paral of the latest telegram now enclosed that the agreement might have to be extended for another six months we cannot see any reason why the non-payment of rental should delay the return to commercial operation, if the Companies are otherwise ready to take over. this is, of course, entirely for the Colonial Office.

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