TNAG-0424-FCO40-470-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 104

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and which incorporated a 4% p.a. compound increase),

none of the indicative prices which had been put forward would enable the system's debt to be paid off

by the year 2000. This was considered unacceptable

and, working backwards, the TSG had concluded that

$5,000 million represented the maximum figure of

capital cost which the system could bear. As this

figure appeared more or less feasible, it had been decided to continue the dialogue with the consortia with a view to developing and concluding a suitable

contract.

3.

Mr. Wiltshire said the British Group had carefully consi- dered Mr. Haddon-Cave's letter of 1st August, and were of the view that the letter presented certain problems for them. problems related to:

(a) the ceiling price;

(b) escalation;

(c) unforeseen circumstances;

(d) design responsibility; and

(e) the programming or re-programming of work.

These

He stressed, however, that although the British Group proposed to continue to work as a group seeking a single contract, there were significant differences between the positions of the E & M and civil engineering sub-groups. In view of this, the British Group had prepared their response to Mr. Haddon-Cave's letter in three parts, relating, respectively, to the E & M sub-group's position, the civil engineering sub- group's position and the overall financial picture. He proposed

Contd/...

CONFIDENTIAL