TNAG-0422-FCO40-468-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 157

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3. FIRST IT RECOMMENDS THAT THE SCHEME IS VIABLE, FINANCE CAN BE RAISED AND THE GO AHEAD SHOULD THEREFORE BE GIVEN. SEEMS VIRTUALLY NO DOUBT THAT EXCO WILL AGREE ON THIS.

THERE

4. SECOND IT RECOMMENDS THAT AUTHORITY SHOULD BE GIVEN TO PROCEED ON THE BASIS OF DOING THE WHOLE PROJECT (NOT MERELY THE FIRST FOUR STAGES). ARGUMENT IS THAT THIS WILL BE MORE VIABLE AND GIVE MORE BENEFIT. BUT IT IS RECOGNISED THAT IT MAY MAKE FINANCING ARRANGEMENTS SLIGHTLY MORE DIFFICULT. IN PARTICULAR THE COMMITTEE CONSIDER THAT IT WOULD THEN BE NECESSARY TO DEFER RAISING FUNDS ON THE LOCAL MARKET UNTIL A LATER STAGE 1.E. WHEN THE SCHEME IS EARNING A NETT INFLOW. AS A COROLLARY THE GOVERNMENT WOULD NEED TO PUT IN MORE AT THE OUTSET. APPARENTLY THE COMMITTEE HAS RECOMMENDED

HONG KONG DOLLARS 1,500 MILLION TO BE PUT IN SEVEN TO EIGHT

TRANCHES AND ARGUE THAT THIS WOULD SAVE SOME HONG KONG DOLLARS 4,890 MILLION COMPARED WITH RAISING THIS AMOUNT FROM INTERNATIONAL SOURCES.

5.

THIRDLY THE PAPER RAISES THE QUESTION WHETHER TO GO FOR PACKAGE OR FRAGMENTED CONTRACT DEAL. THIS APPEARS TO HAVE BEEN MAJOR POINT OF DEBATE WITHIN THE COMMITTEE AND OUR IMPRESSION IS THAT THERE IS STILL A SPLIT WITHIN THE COMMITTEE ON IT WITH VIEWS FREQUENTLY CHANGING. WE ARE SATISFIED THAT ALL MEMBERS OF THE COMMITTEE ARE AWARE OF THE ARGUMENTS AGAINST IT (WE HAVE ALSO BEEN DOING SOME DISCREET LOBBYING OF MEMBERS OF EXCO) BUT ATTRACTIONS OF THE PROTECTION OF TENDER PROCEDURE AND AVOIDING COMMITTMENT TO ANY ONE COUNTRY REMAINS STRONG. SO ALSO DOES THE INSTINCT TO TRY TO FIND THE LOWEST POSSIBLE PRICE. COMMITTEE HAVE THEREFORE RECOMMENDED THAT THEY SHOULD BE AUTHORISED TO INVESTIGATE BOTH METHODS FURTHER FOR A WHILE.

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