The initial system comprises four stages, the second of which would be due for completion by the end of 1976. It would be possible for construction to be halted at any stage after the second and still leave a vieble systea (cost: £90m). After completion of the initial system the sequence of construction of the later stages can be varied to some extent and this flexibility may give some guide as to the way the Government would decide the contracts should be let, though it would seen essential to retain a consultent with overall responsibility.
This then is the broad background againat which we would have to consider the credit-worthiness of the Colony over a forward period for a maximum liability somewhere between £90m and $300m to be expended at a rate between £20-£30% per annum (except for a peak of £36m in 1975). The problem is what if any limite would we set and what special financial conditions or additional underwriting security would we require assuming there is a requirement for contractor and orquipment credits and that what the Government of Hong Kong decides to do is viable.
I am assuring that the PCO will be dealing with the recommendations put forward by the EBTC in Hong Kong (24/11/70 copy to Laird only) for a purely political approach to the problem of securing the order for the UK. They may also like to consider with the Treasury the feasibility of a borrowing operation in the market which presumably would be the alternative source of commercial finance.
Copies go to Laird and Willson (PCO), Rawlings (CGD), Clackrell (Hong Kong) and Robins and fatson (DTI).
A P Toms
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