TNAG-0424-FCO40-470-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 197

Ref: SCR 10/5591/70 III

CONFIDENTIAL

Ji Se

م تف

178

ENVIOL

COLONIAL SECRETANJATIJA POKER,

HONG

KONG

;M (EAD)

1st August, 1973. Cher 393

2 en pailty

Ov.

21/1

Dear Sir,

I refer to the consultations which took place in Hong Kong on 28th and 29th June, 1973 between representatives of the British Group and the Mass Transit Steering Group, copies of the records of which were subsequently made available to you. I refer also to yo letters dated 7th, 18th, 20th and 21st July, in which you provided further information in clarification or modification of the British Group's proposals of 4th June.

2.

I am now to inform you that, after considering the Steering Group's recommendations, the Governor in Council has:

3.

(a)

(b)

decided in principle to adopt the single-contract approzen for the construction and equipment of the first four stages of the Mass Transit Railway; and

directed that the Steering Group should forthwith enter into further exchanges with the four consortia who have put forward single-contract proposals, with a view to ascertaining from each consortium whether they would be prepared to enter into substantive negotiations with the Steering Group.

In explanation of paragraph 2(b) above, and for your own confidential information, the decision to adopt the single-contract approach has been based largely (albeit not solely) on the need to limit uncertainty as to the final cost of the project. After careful consideration of all the factors involved, the Government has come to the conclusion that, because of the heavy interest burden, the financial viability of the system would be assured only if the final contract price, after taking into account cost escalation and all other variations, is below the equivalent of HK$5,000 million at the

The Hon. Sir Douglas Clague, C.B.E., etc.,

Hutchison International Ltd.,

Prince's Building,

Hong Kong.

.... exchange