TNAG-0426-FCO40-472-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 158

HO FOM45/11

OUD TI

DT!

00 F C 0

CU ECG D

G&PS 710

DESKBY 111245Z (TOO ALL)

EN CLAIR

FM HONG KONG 1112152

UNCLASSIFIED

DESKRY TO ALL 11124SZ

17: !ན

TO IMMEDIATE D T TELNO CREDA 151 OF 11TH DECEMBER, 1973. AND TO F C O (FOR HKIOD) AND (EPD) AND E.C.G.D. (FOR FELL)

FOR BOYCE (OPG) FROM ASTON.

REFERENCE OUR TELEPHONE CONCERSATION 11292 FOLLOWING IS TEXT OF LETTER DATED 11TH DECEMBER FROM MADDON-CAVE TO CLAGUE AND OF PRESS RELEASE.

LETTER BEGINS

**FURTHER TO OUR CORRESPONDENCE RESTING WITH MY

LETTER OF 18TH DECEMBER 1973 ! HAVE BEEN INSTRUCTED TO INFORM

YOU THAT, AFTER CAREFUL CONSIDERATION OF THE PRE-EMPTIVE BID

AND OF THE COUNTER-BIDS, THE GOVERNMENT HAS TODAY DECIDED

THAT THE MASS TRANSIT STEERING GROUP SHOULD ENTER INTO

FURTHER REGOTIATIONS WITH THE JAPANESE CONSORTIUM ON THE BASES OF ITS PRE-EMPTIVE BID.

* ENCLOSE A COPY OF A PRESS STATEMENT ANNOUNCING THIS DECISION, WHICH WILL BE ISSUED THIS EVENING, AND WOULD DRAW YOUR PARTICULAR ATTENTION TO THE LAST PARAGRAPH OF THE STATEMENT.

I SHOULD LIKE AT THIS TIME, ON BEHALF OF THE HONG KONG GOVERNMENT, TO EXPRESS TO YOU, AND THROUGH YOU TO YOUR PRINCIPALS, THE GOVERNMENTS MOST SINCERE APPRECIATION FOR THE VERY CLOSE INTEREST AND CO-OPERATION YOU HAVE DISPLAYED IN RESPECT OF THIS PROJECT OVER THE PAST MONTHS,

YOURS FAITHFULLY

C.P. MADEON-CAVE

FINANCIAL SECRETARY. ́*

LETTER ENDS

PRESS RELEASE BEGINS

''THE GOVERNMENT ANNOUNCED THIS EVENING THAT IT HAS DECIDED TO ENTER INTO NEGOTIATIONS WITH THE JAPANESE CONSORTIUM, REPRESENTED LOCALLY BY JARDINE, MATHESON AND COMPANY LIMITED, TO SEE WHTHER IT IS POSSIBLE TO CONCLUDE A CONTRACT FOR THE CONSTRUCTION AND EQUIPMENT OF THE FIRST FOUR STAGES OF THE MASS TRANSIT RAILWAY. THIS DECISION HAS BEEN TAKEN FOLLOWING ON A SERIES OF DISCUSSIONS WHICH HAVE TAKEN PLACE DETWEEN THE MASS TRANSIT STEERING GROUP AND THE THREE CONSORTIA WHICH HAD PUT FORWARD SINGLE CONTRACT PROPOSALS.

IN ANNOUNCING THIS DECISION A GOVERNMENT SPOKESHAN STRESSED THAT THE NEGOTIATIONS WILL TAKE A NUMBER OF PONTHS, BUT WILL BEGIN IMMEDIATELY. WHETHER OR NOT THE BEGOTIATIONS CAN BE BROUGHT TO A SUCCESSFUL CONCLUSION WILL DEPEND UPON THE JAPANESE CONSORTIUM'S ABILITY AND WILLINGNESS

TO CONFORM TO THE GOVERNMENT'S DETAILED REQUIREMENTS FOR A CONTRACT,

ONE OF THE MOST IMPORTANT REQUIREMENTS LAID DOWN BY

THE GOVERNMENT WAS THAT THE CONTRACT PRICE SHOULD BE LIMITED

TO HK DOLLARS $,000 MILLION, THIS WAS BECAUSE IT WAS CONSIDERED THAT

THIS WAS THE MAXIMUM SUM THE RAILWAY COULD AFFORD WITHIN A

GIVEN FARE STRUCTURE AND BEARING IN MIND THE LONG PERIOD OYER WHICH THE DEBT HAS TO BE REPAID, RESULTING IN A VERY HEAVY INTEREST BURDEN. THE JAPANESE CONSORTIUM'S PROPOSAL WUS THE ONLY ONE WHICH WAS WITHIN THIS LIMITATION.

SHOULD IT NOT BE POSSIBLE TO CONCLUDE A CONTRACT

WITH THE JAPANESE CONSORTIUM, THE GOVERNMENT SPOKESMAN

ADDED, CONSIDERATION WOULD BE GIVEN 10 NEGOTIATING WITH ONE OF BOTH

OF THE OTHER COMBORTIA, THE ANGLO-ITALIAN GROUP REPRESENTED LOCALLY

BY HUTCHINSON INTERNATIONAL AND THE ANGLO-FRENCH-GERMAN CONSORTIUM BY HONG KONG METRO CONSTRUCTORS.*

PRESS RELEASE ENDS,

WE ARE BOUND TO BE ASKED FOR COMMENT. GRATEFUL THEREFORE FOR GUIDANCE BY #100Z/12.

WE DO NOT AT PRESENT HAVE SUFFICIENT BACKGROUND ON THE DECISION TO OFFER YOU ANY VIEWS OR COMMENT, SAVE ACUTE DISAPPOINTMENT.

DTI PLEASE PASS COPY TO MISS LACKEY(CREEP).

ASTON

BUNDAN

SENT AT 12387/11 EJM