TNAG-0423-FCO40-469-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 23

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EXPORT

ARANTEE

CREDITS.

DEPARTME

160)

This Kelly

EXPORT CREDITS GUARATHE DEPARTMENT

Aldermanbury House

Aldermanbury

London, E.C.2

M

10 July 1973

ツク

139

138

Dear Köndal,

HONG KONG MASS TRANSIT SCHEME

With my letter of 3 July I enclosed a tabulation of details so far as we knew them of the four proposals made to the Hong-Kong Government. We have now heard from MITI that the latest Japanese proposals are as follows:-

Repayment terms:

Capitalisation:

Building period:

26 half yearly instalments, first at 62 years, last at 19 years from contract;

Interest accruing up to the end of year 6 from contract to be capitalised;

5 years

MITI say they are "considering their position" and have not formally agreed these details but we have no doubt that they will provide investment insurance cover, as proposed for some months past; nor are they likely to demur at the proposals though these involve a 12 months carencia between the completion date and first repayment.

2. Clearly the Japanese proposals represent a significant improvement upon the British terms, even if you are able to agree our latest proposals. However the Hong Kong Government have given no indication that they would require or seek any improvement beyond the terms I put to you in my letter of 2 July. Since the British consortium suggested that a condensation of the building programme into 5 years was technically ill advised the Hong Kong Government may be envisaging the Japanese building period slipping out to equate with the British; this would put first repayments on the two proposals into line with each other. This would then leave the Japanese proposals better by 1 year in the length of credit;

but

I do not think the Government are concerned to obtain longer than 12 years from completion.

3. Even with this latest information I do not see any present need i to go further than we have been asked. The information does however

point up the necessity of agreeing to the capitalisation and first repayment requests made by the Hong Kong Government if the British group are to remain serious contenders.

Youn

Ten Collerst

K W Cotterill

R Jones Esq

HM Treasury

Great George Street

London SW1