TNAG-0170-FCO40-206-British-Trade-Commissioner-1969 — Page 127

NOTE

Gross Harbour Tunnel Hong Ko

ECGD and their French counterpart (COFACE) have continued to keep in touch over the project. ECGD have now reconsidered their terms. They would be content with several guarantees alone from the shareholders, a minimum security requirement which they say they would in no circumstances relax, together with certain other procedural requirements which they say are negotiable. They have told the Franch what their requirements are and they are hoping to arrive at an equation of terms with them against which the Company would be free to consider,

2.

(1) joint British/French finance (provided the problems of co-ordination between the contractors can be overcome);

(2) French finance alone;

3) British finance alone.

Their objective is to prevent the Tunnel Company from

playing off the French and themselves against each other but they also hope that the known preference of the Company for a British contractor will induce them to prefer (3).

3.

At this stage the French are unable to agree with ECGD on common terms. It seems that they would certainly require several guarantees from some of the shareholders but they are contemplating exempting the Hong Kong Government from their share of such an undertaking and apparently also the Hong Kong Shanghai Bank. Moreover, they will not take a decision until the committee which vets all their applications meets in early Maroh.

Meanwhile, they are having discussions with

their contractors, Dumez, and ECGD have informed Costains of

the new terms.

1.