TNAG-0424-FCO40-470-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 256

M..

0003160 G F. 316

SECRET

ANNEX D to XCS(73)8

PROPOSALS RECEIVED FROM THE ANGLO-FRENCH-GERMAN CONSORTIUM ("HONG KONG METRO CONSTRUCTORS")

Part I Summary of Proposals

Consortium's Organisation

The consortium comprise 11 companies in Britain, France and Germany under the sponsorship of Hochtief AG, Essen. They are represented in Hong Kong by Zung Fu Co Ltd. Associated with the consortium are an international banking group under the management of Deutsche Bank AG, Banque de l' Indochine and Morgan Grenfell & Co Ltd (in association with The Chartered Bank).

2

Should they be awarded the contract to construct and equip the MTR, the consortium will establish a company in Hong Kong. Contractual Arrangements Proposed

3

The consortium propose to negotiable a contract containing a series of unit rates and unit prices, which will be subject to remeasure- ment and cost escalation.

L

They propose generally to adopt conditions of contract drawn up by the Fédération International des Ingénieurs-Conseils (FIDIC), but have specified a number of special requirements, the main ones being that:

(a) adequate clauses should be included in the contract to cover

the possibility of changes in exchange rates;

(b)

exchange risks should be borne by the client; and

(c)

visas and work permits should be granted for the purpose of importing workers, within four weeks of application; (the consortium recognise, however, that they must accept the Hong Kong Government's ruling on each individual application). The consortium would be prepared to provide a performance bond if required.

5

Pricing

(a) Price indications

6

The consortium have estimated the total contract price as of 1st May 1973 to be as follows:

HK$ mn

Civil engineering and building

1,850

Supply and installation of E & M plant

and equipment

1,190

Cost of establishment, project

management, etc.

Total

230

3,270

These estimates were based on the following exchange rates:

£1 HK$12.631; FF1 = HK$1.112; DM1 = HK$1.806

SECRET

/.... (b)