TNAG-0508-FCO40-573-Construction-of-underground-railway-system-in-Hong-Kong-1974 — Page 134

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PRIORITY

CYPHER CAT A

FM MOKYO 1405002

CONFIDENTIAL

CONFIDENTIAL

T

TO PRIORITY ECGD TEL NO EXCED 9 OF

REPEATED FOR INFO TO FCO.

RECEIVED IN REGISTRY No. 51 4 MARCH

18 MAR 1974

HKK 21|2.

;

tv/36

Mr Shind

Spoken

Pi speak

FOLLOWING FOR COTTERILL FROM MCGHIE. HONG KONG MASS TRANSIT SCHEME.

1. WEEDON AND WRIGHT SEEM SATISFIED WITH THE SEPARATE TALKS THEY

HAVE HAD WITH MITI AND REPRESENTATIVES OF THE JAPANESE CONSORTIUM.

THE JAPANESE THROUGHOUT MAINTAINED THE FICTION THAT THE BRITISH

HAD TAKEN THE INITIATIVE IN THIS APPROACH. WEEDON WAS PREPARED

TO GO ALONG WITH THIS. THE JAPANESE CONFIRMED THAT THEY ARE

THINKING IN TERMS OF A BRITISH PARTICIPATION OF AROUND 10% TO 15%

ON THE MECHANICAL AND ELECTRICAL EQUIPMENT SIDE ON A A

SUB-CONTRACTING BASIS. THEY DO NOT WISH TO INVOLVE THE ITALIAN

SIDE OF THE ANGLO-ITALIAN CONSORTIUM. GEC WERE INVITED TO MAKE

PROPOSALS AS SOON AS POSSIBLE ON THE RANGE OF PRODUCTS OR DISCIP-

LINES THEY COULD OFFER.

2. THE REASONS FOR THIS TORTUCUS JAPANESE APPROACH HAVE NOT

EMERCED CLEARLY BUT CEC CONSIDER THAT HAVING PUT IN A FIXED PRICE PRE-EMPTIVE BID, THE JAPANESE HAVE NOW REALISED THAT THEY CANNOT POSSIBLY CARRY OUT THE CONTRACT WITHOUT HEAVY LOSS, GIVEN HEAVY

ESCALATION IN COSTS FOLLOWING THE ENERGY CRISIS. IT IS CONCEIVABLE

THAT THEY MAY WISH TO ATTEMPT TO RENEGOTIATE WITH THE HONG KONG

GOVERNMENT AND WISH TO INVOLVE THE BRITISH TO ASSIST THEM WITH

THIS. IT MAY NOT BE WITHOUT SIGNIFICANCE THAT MITI WAS REPRESENTED

BY KOINO WHO LED FOR THE JAPANESE SIDE DURING THE OFFICIAL TALKS WITH MR CHATAWAY ON INVESTMENT MATTERS WHICH OF COURSE INCLUDED

JOINT VENTURES IN THIRED COUNTRIES.

Po

3. THE JAPANESE HOPE THAT SECRECY CAN BE OBSERVED ABOUT THESE

PRELIMINARY EXCHANGES, THAT NO FURTHER REFERENCE SHOULD BE MADE

TO THEM AND THAT GEC PROPOSALS SHOULD COME OUT OF THE BLUE. THIS MAY

BE BECAUSE OF PRESENTATIONAL REASONS WITH THE REST OF THE LARGE

JAPANESE CONSORTIUM.

L. FULLER REPORT FOLLOWS BY BAC.

WARNER.

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CONFIDENTIAL