closer to receiving firm prices. He felt sure that the basis on which they had done their sums, with prime capital cost escalation at 8%, escalation on renewals at 6%, and escalation of fares at 4% was reasonable, though Kindersley (Lazards) had
These cost flow made a brave attempt to persuade him otherwise. calculations had led to the figure of % HK 5000m as the most they could afford. This could be revised upwards to some extent, depending on further evaluation, but once fixed the ceiling must not in any circumstances, be exceeded.
The Secretary of State said it looked as though the honest contractors were facing elimination from the game by Hong Kong who would go on dealing with the dishonest ones, which naturally Haddon-Cave denied.
The Secretary of State said that he would ask the leaders of the British group to come and see him after his return from Tokyo so that they could discuss their position and explore the possibilities of working towards a formula that would cover the problems of escalation and pricing satisfactorily.
The meeting started late and Haddon-Cave had to leave after less than half an hour to catch his plane.
OFP2 (Overseas Projects Group)
7 September 1973
cc. Mr Goodfellow (HKIOD) FCO.
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