HONG KONG DEPARTMENT
ROOM 271,
KING CHARLES STREET.
A
H.K.
mis Mewart'
19
U.K. loses £13m. Hong Kong tunnel job over ECGD terms
BY CHARLES SMITH, FAR EAST CORRESPONDENT
FRENCH company, Societé Française d'Entreprises de Draggages et des Travaux Pub liques, is understood to have offered to build the £13m. Hong Kong harbour tunnel, which was earlier expected to be built by Richard Costain.
Negotiations for the placing of the tunnel contract in Britain broke down last year over a disagreement on the terms of financing. The French Government has still to make a final decision on some financial aspects of the contract. But it is thought that it will be able to reach agreement with the Hong Kong Cross Harbour Tunnel Com- pany which is sponsoring the pro- ject.
Societé Française has executed a number of major construction con- tracts in Hong Kong and is believed to have equipment in the Colony which it would be glad to employ on a further project. However, there is no reason to believe that France became actively interested
in the tunnel scheme until last October when negotiations with the British Government finally col- lapsed. The Cross Harbour Tunnel Company is thought to have ap- proached interests in both France and Japan at this stage, but talks with Japanese concerns do not appear to have made much pro- gress.
The breakdown of the tunnel company's negotiations with Britain was caused by disagreement over the terms of a Financial Guarantee required by the Export Credits Guarantee Department. The ECGD asked for a joint and several" guarantee which would have made each of the company's shareholders responsible for the entire loan as well as for the portion corresponding to their individual stakes in the enterprise. The terms of the guarantee required by France will be decided by an inter-Ministerial committee which has yet to meet. But it is believed that France will propose
a lien on the tunnel itself as the basis of its agreement with the company. The interest rate being demanded by the French interests is substantially higher than that which would have been charged on the British loan.
The main shareholders in the Cross Harbour Tunnel Company are Wheelock Marden and Hutchi- son International (each with 26 per cent, of the total) and the Hong Kong and Shanghai Banking Corporation which has a 10 per cent. stake in the project. The Hong Kong Government itself also has the option to participate.
Commenting on the news of the French bid, Mr. Michael Montague, Chairman of BNEC's Asia Committee, said yesterday that he was disappointed the tunnel company had had to look else- where because it found British financial requirements unaccept- able. He still hoped there was a possibility of the British terms being re-examined.
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ARCHIVES No.31 27 JAN 1969
33
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