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EXPORT CREDITS GUARANTEE DEPARTMENT
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Your reference
Telephone: MONarch 6699 Telex: 21821
Our reference SL/CW 24126/35 Pt. 3.
22nd September, 1967.
Dear Hewitt, (G)
Hong Kong Tunnel
You wrote to Hawkins on 18th September enclosing the first comments of Hong Kong's Financial Secretary on Treasury's proposals as contained in Figgures' letter of 8th September. Not all of the points, or of Cowperthwaite's comments on them, concern E. C.G.D. but in one or two of these cases it might perhaps be helpful if we say something. (References are to the paragraphs in Treasury letter of 8th September cited by Cowperthwaite).
4(a) The single contract concept is the Treasury's; they must say how
fundamental it is to their offer.
4(b) For our part, we have not mentioned the Treasury proposals to Costains. Cowperthwaite's attitude seems rather unreal however if he expects Costains (or any other contractor) to proceed without satisfying themselves about the financing of these extras. We shall leave Costains in no doubt that any loan that we are supporting will be for a fixed amount. Costains would have a variable price contract and we would expect them to be very careful to establish the certainty of any payments which would not be coming out of the loan. This must also apply to any excess above the forecast price. As we understand it Treasury are requiring the Hong Kong Government to undertake to meet excesses over contract price as a condition of their (Treasury's) guarantee support, quite independently of Costains' requirements.
4(c) Under the arrangements as now proposed the question of the lien
becomes a somewhat tricky one. The Tunnel Company originally offered a lien subject to certain prior charges on the Company's earnings as
P. Hewitt, Esq.,
Commonwealth Office,
Downing Street,
LAST
REF
61
London, S.W.1.
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