TNAG-0563-FCO40-658-Construction-of-an-underground-railway-system-in-Hong-Kong-1975 — Page 185

For discussion

on 14th January 1975

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Copy No

XCS (75)13)

of 50

MEMORANDUM FOR EXECUTIVE COUNCIL

ARRANGEMENTS FOR THE CONSTRUCTION AND EQUIPMENT OF THE MASS TRANSIT RAILWAY

A

B

Introduction

On 11th December 1973, after considering memorandum XCS(73)12 (a copy of which is at Annex A), Honourable Members advised and the Governor ordered that the Japanese Consortium's pre-emptive bid for the Mass Transit Railway contract be accepted.

2

Following this, the Mass Transit Steering Group undertook immediate discussions with the Japanese Consortium with a view to the issue of a Letter of Intent to enter into negotiations for a formal contract, The Letter of Intent was signed on 15th February 1974 and a copy is at Annex B.

3

At a meeting on 17th December 1974, the Japanese Con- sortium notified the Mass Transit Railway Provisional Authority that it was unable to proceed with further negotiations for a contract to build, equip and finance the first four stages of the Mass Transit Railway within the framework of the Letter of Intent. In the light of this disappointing development the purpose of this memorandur-is- threefold, namely -

(a) to outline the history of the negotiations with the

Japanese Consortium from the date of the Govern- ment's acceptance of the Consortium's pre-emptive bid to the Consortium's withdrawal;

(b) to seek advice on the political and public relations

issues involved in (a) in the light of the outcome of the negotiations with the Japanese Consortium and the way they have been concluded; and

(c) to give an assessment of the options now open to the Government, to outline a proposal for a Modified Initial System and to seek approval for that System (on which see paragraphs 18 to 22 below).

Negotiations with the Japanese Consortium

4

RECEIVED REGISTRY No.52

17 JAN1975

HKK 21/4

The negotiations with the Japanese Consortium intended to lead to the executicn of a formal contract date back to the Govern- ment's acceptance of the Consortium's pre-emptive bid on 11th December 1973. The Letter of Intent was signed on 14th February 1974, but since that time the continuing impact of world inflationary forces led to the Consortium giving progressively stronger indications that it has been having difficulties with the project. Finally, after

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