TNAG-0424-FCO40-470-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 74

9

Sir D Watson Wayson

PS Mr Koyle

CONFIDENTIAL

Minister

hope this win of the haladoscope prochuces

hut it well have like quick.

Cab

WA

..

Felte

дарее

patter

"Заражене

ent Stahans

yes..

Tha

Walio

21/8

(217)

MASS TRANSIT SCHEME: HONG KONG

1.

2719

Goodfellows the P/A

The leaders of the British consortium came to see the 7 Secretary of State for Trade & Industry on 19 September. Little progress was made but DTI officials concluded that GEC, as leaders of the electrical and mechanical elements of the consortium were on the point of finding a new partner to replace the civil engineering contractors, Costains.

It was admitted at the meeting that GEC were in general willing to accept Hong Kong's fixed price conditions but that Costains were not.

2. There was no discussion of possible new partners for GEC, I have told Mr Walker's office in strict confidence of the Governor's discussion with Lord Aldington, the Deputy Chairman of GEC, about the possibility of a link-up with the Italian civil contractors. I imagine this possibility will be very much in GEC's mind. But DTI are also aware of the imminence of a Japanese pre-emptive bid and have made it clear to GEC anything they do will have to be done quickly.

3. I do not think there is anything for us to do. If GEC can agree a partnership with the Italians I see no reason for the FCO to object on the assumption that the all-British bid has failed. Mr Walker is not disposed to encourage the alter- native Franco/British/German consortium. The British partner in this, GKN, would not be able to carry out a significant amount of work itself and would have to sub-contract widely and not necessarily in this country.

4. The other possibility, of co-operation with the Japanese, is presumably still open to us. But the DTI are more wary of this on the grounds that the Japanese would take the pickings. Nor are there any signs that the Governor of Hong Kong has reversed his position that he does not want the Japanese to build the underground unless all else fails.

5. I do not know whether Costains are taking the extinction of their bid philosophically or whether we shall be faced with a demand that HMG compel the Hong Kong Government to accept the British consortium on Costains' terms. Such a demand would create obvious difficulties for us but I do not think they would be serious unless GEC fails to make alternative arrangements with the Italians or others.

20 September 1973

CONFIDENTIAL

A C Stuart

Hong Kong & Indian Ocean Department

/Copy to: