TNAG-0425-FCO40-471-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 151

* EXPOR

CREDITS

GUARAN

INTEE

DEPARTME

Mrs H E Boothroyd HM Treasury

Great George Street London SW1

Dean +/ester,

(273)

EXPORT CREDITS GUARANTEE DEPARTMENT

Aldermanbury House

Aldermanbury

London, EC2P 2EL

8 November 1973

Rr

PA

12.00

Godfellow

HONG KONG MASS TRANSIT SYSTEM

HKK.21/+

EXFORT (FINANCIAL) GUARANTEES CASE 903

The emergence of a UK/Italian consortium and the consequent reduced involvement of the UK creates a new situation in the light of which we must seek your reaffirmation of our support for the same credit terms as were agreed for the wholly UK bid.

Last week the British Group held discussions with the Italian Group which is led by Intermetro Spa, and comprising Fiat, IMI, Centrale Finanziera Generale, Impresit, Italstat, Breda Ferroviaria and Italianci Condotte d'Acqua. The object of these discussions was to reach agreement upon the terms in which a joint bid could be submitted to the Hong Kong Government. Agreement was reached in principle that:

FO

01.

02.

03.

a limited liability company will be incorporated in Hong Kong for the purpose of contracting with the Government, the shareholders in such company being the British and Italian companies working on the project;

60% of the Electrical and Mechanical work will be allocated to the British participants, 40% to the Italians; 25% of the civil work will be allocated to British contractors and 75% to Italian;

an undertaking will be given to Hong Kong Government accepting the principle of a lump sum price contract, subject of course to agreement upon contract conditions particularly as regards force majeure circumstances but not offering a price commitment until early 1974 when further basic and design information will be · available from Hong Kong to reduce the present large "imponderable" and unassessable unknown factors that could have a significant effect on pricing and cost.

Much work has still to be done before anything approaching a firm figure can be put upon the size of the UK share in the new consortium, but using 1972 prices as a basis and allowing for the up-dating of these plus provision for escalation and unforeseen circumstances the UK element is likely to be somewhere in the region of £100 million It will certainly be not less than £80 million.

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