TNAG-0509-FCO40-574-Construction-of-underground-railway-system-in-Hong-Kong-1974 — Page 26

COFFIDENTIAL

21/1

D N Royce 284

Overseas Projects Group

RECEIVED IN REGISTRY No. 51

17 SEP 1974

HKK 21/2.

Overseas Pinance & Planning Division

Department of Trade

1 Victoria ŝtrest

London SW1

D

then

P/A

78

7/ix

MT S

I last wrote about kass Transit on 6 august Since then Philip Haddon-Cave has made an important speech, the full text of which I enclose; I have side-lined those passages of particular importance You will see that he went out of his way to say that he had every confidence that the Japanese consortium intended to conclude the contract for building, equipping and partly financing the sass Transit System within the terus set out in the Letter of Intent, making the point that if they were going to withdraw, they would have withdrawn in February; and that the decision to proceed then must have been done in the belief that they could do the job within the price of HKJ5000 million. It followed, therefore, that the consortium would not try to cut corners and the Hong Kong Provisional authority would, in any case, be examining the design solutions as well as the programme of works in detail, not only to determine whether the performance specifications had been net in full, but also whether any of the design solutions were liable to generate unacceptably expensive operational and maintenance costs in the futurs.

2.

My information from the commultant ; (and I would be steful if you would respect their confidence) is that there is a long way to go in the negotiations with the Japanese, more particularly if they insist on using their om conmilta to prepare the detailed design, as they are at present. The Plenary Session to be held next week in Japan will be import- ant in trying to get the Japanese back to a tighter schedule, but my informant stressed that they were taking it very seriously and putting a good deal of effort into the whole project. In the discussions so far the Japanese have made it quite clear that any proposals they put forward ware without

COMPILENT IAL

/commitment