TNAG-0425-FCO40-471-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 30

.! HOPE TO HEAR FROM THE G K N REPRESENTATIVE TOMORROW). THERE IS NO GUARANTEE EVEN SO THAT EXCO WILL ACCEPT IT BUT IT SHOULD

OW HAVE AS GOOD A CHANCE AS THE JAPANESE WITH THEM.

CONVERSELY

IT IS UNLIKELY THAT IT WILL, AT THIS STAGE, KNOCK THE JAPANESE OUT.. THERE MAY YET BE A NUMBER OF TRICKY POINTS IN NEGOTIATIONS WHEN STEERING GROUP BEGIN PROBING INTO DETAILS OF PRICING SEEMS LIKELY TO BE EXCALATION ARRANGEMENTS.

9.

1

MAIN PROBLEM

SO FAR STEERING GROUP APPEAR TO HAVE ACCEPTED THAT TREATING ESCALATION OVER 10 PER CENT AS A FORCE MAJEURE IS A

IT MAY BE

REASONABLE QUID PRO QUO FOR CONCESSION TO JAPANESE ON GUARANTEE. BUT SOME CONCERN AT SIZE OF POSSIBLE OVER RUN IS ALREADY EVIDENT HENCE QUESTION ABOUT FURTHER EQUITY. HOWEVER THAT THIS WILL NOT BE PURSUED IN ANY DETAIL UNTIL THE NEXT ROUND AND THAT STEERING GROUP WILL MERELY ASSUME THAT SOME RESOLUTION MIGHT BE POSSIBLE.

10. TEXT OF PROPOSALS AS SUBMITTED FOLLOW BY BAG.

DTI PASS COPY TO MISS LACKEY(CRE2).

ASTON

:.

NNNN

SENT AT 08552/03 EJH

_OK THAT ONE PLSE ARRA

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