TNAG-0276-FCO40-312-Plans-for-construction-of-underground-railway-system-in-Hong-1970 — Page 90

EXPORT CREDITS GUARANTEE DEPARTMENT

P.O. BOX NO. 272, ALDERMANBURY HOUSE, ALDERMANBURY, LONDON EC2

Telex: 21821 Telephone: 01-606 6699

5

EXPORT

D. L. Hawkins Esq., H.M. Treasury,

Great George Street, London, S.W.1.

CONFIDENTIAL

Dear

INTEL

GUARAN

DEPARTM

Your reference

Our reference

FG 600/35

9th September 1970.

Date

Financial Guarantees Committee

Case No.903- Hong Kong Underground Railway

12

I spoke to you on the 22nd June about an enquiry from Rothschilds regarding the possibility of Financial Guarantee support for a U.K. participation in the proposed Hong Kong Underground Railway project. You said then that the size of the project and the political problems involved made it impossible to give a quick decision.

2. In spite of the limited amount of information that we have at present I am writing to give you and the other members of the Committee the opportunity to consider whether, in view of the political problems involved and of the background of our experience of the Hong Kong Tunnel project, Financial Guarantee support should, in principle, be approved for this project.

3.

The minimum cost of the Underground scheme including rolling stock is estimated to be in the region of £100 million, for two lines, and the maximum about £250 million for four lines. It is thought that the proportion of imported equipment and services would be some 65% of the total.

4.

The consultant firm, Freeman Fox, are preparing a report on the scheme referred to in Hong Kong, apparently, as the "mass transit system". This report is due for publication shortly but it may be another six months before the Hong Kong Government decides whether to go ahead with the project. If they decide to do so it is expected that they will invite tenders from the U.K., Japan and continental Europe and they will ask for a package deal including financial offers. The Director of Public orks of Hong Kong is said to have talked in terms of 7 to 15 years credit. The construction period is estimated to be between 3 and 5 years possibly with parts of the line being opened while others are under construction. Rothschilds say they would probably be asked to finance a proportion of the local costs in addition to U.K. supplies and services.

5.

Representatives of the Export Group of the Constructional Industries, Locomotove and Allied Manufacturers Association and Rothschilds recently visited Hong Kong and had high level talks with Hong Kong officials about the proposed underground. The impression gained by this mission was that the scheme would go ahead but that the Hong Kong Government would be looking for the best financial offer they could get and, in this respect, the U.K. would be hard pressed by competition, particularly from Japan. We may therefore expect, if we do decide to consider the scheme further, to be asked to agree long terms.

CONFIDENTIAL

16.

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