TNAG-0422-FCO40-468-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 101

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HONG KONG MASS TRANSIT SCHEME

1.

No.1 min

-

R.

In sending forward Mr Stuart's minute below, I take

this opportunity of attaching for your information a copy of

a Personal letter dated 16 February which I have just received from the Governor.

2.

The game is still on, and I think we remain as well placed as anybody. I do not think I would be as pessimistic as Mr Wilford about the likelihood of the consortium approach being abandoned. There is obviously a fair head of steam in favour of the multi-contract approach building up among the professional experts in Hong Kong; and Mr Haddon-Cave clearly intends to use this alternative to the full as a

bargaining card in the further rounds with the various "package" consortia.

But I would have thought that there was a good deal of room for hope that the British consortium might still carry the day with the Hong Kong Government, provided that they can come up with a final proposition that is attactive and has the edge on its competitors. I should

have thought (with reference to paragraphs 3 and 4 of the Governor's letter of 16 February) that it will in fact prove very difficult to make any firm judgment of the financial advantages of the multi-contract approach as compared with the consortium approach, when it comes to the point; and that there are other arguments which might be used to influence the Hong Kong Government at that stage, eg that a switch to a multi-contract approach would mean that the British consortium or any other which might thus be faced with the alternative of tendering for the separate contracts to be offered would in effect have to start afresh from square A This could bring the whole

question of credit finance for the scheme under review (see paragraph 5 of Mr Stuart's minute); and I would suspect might well jeopardise Hong Kong's hope to make a start on the scheme by January 1974.

3.

Clearly therefore the next step is for the British

consortium to put its best foot forward in the coming rounds

of discussion in Hong Kong with a view to getting out in front of their competitors and establishing a proposition which

CONFIDENTIAL

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