TNAG-0322-FCO40-358-Construction-of-underground-railway-system-in-Hong-Kong-1971 — Page 82

CONFIDENTIAL

DEPARTMENT OF TRADE AND INDUSTRY

XXXXXXXXXXXXXX

20 April 1971

01-222-7877

Ext 2240

J X Blackwell Esq CBE

Senior British Trade Commissioner British Trade Commission

HONG KO

??

21

HONG KONG UNDERGROUND RAILWAY

Thank you for your letter of 5 April. Also for the copy of your letter of 4 April to Blackburn with which you enclosed a copy of the Hong Kong Transport Department's confidential paper on sources of finance and confirmed that meaningful answers cannot be given to the questions posed by ECGD in the absence of the necessary Hong Kong Government decisions.

The Transport Department's paper does not examine in any depth the main options available and I am not surprised at the Financial Secretary's reported reaction. Had there been any sign of his taking it seriously I should have wanted to find some way of injecting a comment or two upon it. I find for example the paragraphs on piecemeal open tendering (13 and 14) unhelpful to our interests and indeed misleading.

On the other hand the emergence of a quaspi-government authority who might act as a contracting party for the construction and operation of the scheme would certainly be a necessary prerequisite.

Perhaps this is the point at which to bring you up to date on developments here. You may know that the inter-st of UK industry has narrowed down on the construction side to some 4 or 5 firas asong whom Mitchell Construction who led the TGCI Mission and Costains seen the most likely participants. On the equipment side GEC will probably lead since this group contains within its structure companies who could provide the rolling stock, electrics, signalling and ventilation. A Steering Committee representing both sides has been formed to coordinate action by UK industry. This arrangement has advantages at the moment since it allows for some flexibility and even competition between companies who may be interested in getting a shers of the business, at the same tim avoiding the expense of forming a consortium.

Ian Rosa (GCI) and George Curry (RIA) informed us in February of the decision of the Steering Committee that a team of two financial experts (Forsyth of GFC and Newall of Costains) should prepare in conjunction with Rothschilds and CGD some financial proposals which aight be put forward to Hong Kong. (ECOD sent you a note of the meeting on this subject they held on 12 March) • expressed the view at the time that they would find it difficult to formulate anything sufficiently concrete to be of value at this stage even perhaps in terms of a range of possibilities out of which a basis for negotiation might emerge, e said this because Departments still seem reluctant to tackle the job of formulating limits

CONFIDENTIAL