TNAG-0423-FCO40-469-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 196

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4.4. GUARANTEE. I REITERATED LINE IN PARA 7 OF MY UNNUMBERED

EXCED OF 29 MARCH.

4.5 EXTENT OF COVER. THEY WERE MYSTIFIED BY REFERENCE TO QUOTE FRONT MONEY UNQUOTE, I SAID I ASSUMED THIS MEANT THE COVER

FOR LOCAL COSTS. I CONFIRMED OUR ESTIMATE OF THE AMOUNT COVERED

BY LOAN AS 68 PER CENT OF PROJECT.

5. IN DICUSSION FOLLOWING POINTS EMERGED ON THEIR PERSONAL INTER- PRETATION OF THE A.F.G. CONSORTIUM POSITION.

6. THEY ARE VERY DUBIOUS ABOUT NOT SEEKING A GAUARANTEE. THEY ARE NOT AS CONFIDENT AS THEY WOULD WISH TO BE THAT THE M.T.S. WILL BE FINANCIALLY VIABLE WITHOUT GOVERNMENT SUBSIDY. THEY THINK FARE INCREASES WILL BE NECESSARY BUT NOT POSSIBLE BECAUSE OF PUBLIC REACTION. STORIES IN PRESS YESTERDAY AND TODAY ABOUT POSSIBLE INCREASES IN ENVISAGED FARES, AND REACTION TO THEM, FEED THEIR

DOUBT.

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7. THEIR GOVERNMENTS ARE NOT ABLE QUOTE TO HAVE SAME INSIDE CONFIDENE ABOUT FUTURE OF HONG KONG UNQUOTE AS HMG CAN. THEY WONDERED WHETHER H.M.G. HAD BEEN GIVEN SOME ASSURANCE BY CHINA ABOUT FUTURE OF HONG KONG AND PERHAPS HAD SPECIFICALLY CLEARED THE M.T.S. WITH THEM

I MERELY ASKED IF THEY REALLY THOUGHT EITHER WAS LIKELY:

THEY DID NOT.

8. THEY RECOGNISE THAT IT IS NOW UP TO G.K.N. TO APPROACH ECGD AND ASUUME THIS WILL NOW BE DONE. BUT THEY HAVE DOUBTS ABOUT ABILITY OF HERMES AND COFAS TO MATCH AND ABOUT WHETHER CONSORTIUM CAN . YET RATIONALISE POSSIBLE SHARES OF CONTRACT.

9. GERMAN DOUBTS WHETHER GERMAN ELEMENT CAN MATCH 6 PERCENT,

BUT SAYS THAT APART FROM THIS THEY HAVE HERMES ASSURANCE TO MATCH THE ECGD REPAYMENT TERMS. FRENCHMAN THINKS COFAS CAN MATCH INTEREST AND PERHAPS (BUT NOT SURE) EXTENT OF COVER BUT NOT REPAYMENT PERIOD. BOTH THINK THAT UNLESS CREDIT TERMS CAN BE IMPROVED THERE IS NO POINT IN COMING BACK AT THE BEGINNING OF MAY.

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