5 OCT 190
140
FINANCIAL TIMES
U.K. talks on £13m. Hong Kong tunnel order break down
BY CHARLES SMITH, FAR EAST CORRESPONDENT
A £13m. CONTRACT to build a The main shareholders in the tunnel under Hong Kong harbour Cross Harbour Tunnel Company
are Wheelock Marden and Hutchi may now go to Japan instead of to
son International (each holding 26 a consortium headed by Richard
per cent, of the total) and the Hong Costain following the collapse of Kong and Shanghai Banking Cor- talks on financing between the poration with 10 per cent.
The Hong Kong Cross Harbour Tunnel ECGD is understood to have in- Company and the Export Credits.sisted that each of these partici- Guarantee Department.
The company's decision to break off talks in Britain and to approach Japanese interests was reported yes terday from Hong Kong, more than a year after it was first announced that Costain was likely to get the contract.
The hitch in the negotiations with the ECGD is understood to involve the precise form of guaran- tce which should be signed by the various interests involved in the project.
pants guarantee the whole of the £12.5m, credit required for the pro- ject in addition to the guarantee provided by the Tunnel Company itself.
The ECGD would also have liked a guarantee from the Hong Kong colonial Government, but negotiations on this particular point have been held up pending a decision by the Government on whether or not it should itself be- come a shareholder in the tunnel company.
Although technically the discus-" sions on the tunnel project have' broken down at the official level, the whole scheme also has political connotations and British Ministers are understood to have been drawn into the negotiations.
The scheme is desirable for security reasons-it would replace the existing ferry service between Hong Kong island and the main- land which is liable to be dis- rupted during upheavals of the kind which took place in the colony last year,
Colonel J. D. Clague, chairman of the Tunnel Company, who has been in London since May, told THE FINANCIAL TIMES yesterday that he had been asked to visit Japan on his way back to Hong' Kong for discussions.
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