TNAG-0208-FCO40-244-Discussions-about-extension-to-Kai-Tak-airport-1969 — Page 59

Our Reference: Your Reference:

Treasury Chambers

Great George Street, London, S.W.I Telephone: Whitehall 1234, ext.

3rd June, 1969.

A. Stewa 1 183 R&R

Каттак

31

Hong Kong Airport

I read with interest Derek Smith's letter to you of 30th May. I hope you will not be unduly disappointed to find that for my part I am entirely content with your original letter and your prudence about the terms which you are prepared to guarantee at this stage in the game!

For the record, however, I think I should say that the Treasury do not regard construction contracts as being another form of financial guarantee even if the total value exceeds £2 million. There is a very basic difference between contracts which for example involve pouring cement at a large rate, and those which involve the supply of the more sophisticated engineering and capital goods. I myself interpreted your reserve as meaning that if on inspection the project involved a significant amount of reasonably sophisticated equipment then there might be a case for some extension of terms. But until we know this, and the data at the moment are remarkably imprecise, I would certainly agree that we ought not to provide any indication that we were prepared to go beyond 5 years.

In common with most construction type contracts we are liable to be faced with problems involving local costs. We can certainly not do much towards finance of local costs in this kind of case and it is therefore just as well not to start with an offer which implies a readiness or a willingness to offer more than we can perform.

Copies go to Smith, 8teel, and Carter.

Yours sincerely,

(C.C. Lucas)

J. Gill, Esq.,

Export Credits Guarantee Department,

Barrin ton House,

59/67, Gresham Street,

E.C.2.

LAST

REF.

31

HKK 21

21/11

NEXT

REF.