TNAG-0563-FCO40-658-Construction-of-an-underground-railway-system-in-Hong-Kong-1975 — Page 208

0003160 G.F. 316

Dear Sir,

SECRET

ANNEX B

Busch VA GAME AN E

15th February, 1974.

1.

RE: MASS TRANSIT RAILWAY

On 11th December, 1973, the Hong Kong Government ("Government") instructed the Mass Transit Steering Group

"Group") to enter into discussions with the Japanese Consortium ("Consortium") with a view to issuing a Letter of Intent and to drawing up a Formal Contract for constructing and equipping and financing (in part) the Mass Transit Railway in Hong Kong if satisfactory terms and conditions for such a a Contract could be agreed between Government and the Consortium.

2.

The terms of the Letter of Intent and the agreement regarding the carrying out of preliminary works during the period from the date hereof until the signing of the Formal Contract are set out below.

3.

The Group now proposes to enter into negotiations with the Consortium for the purpose of discussing and agreeing the terms and conditions of the Formal Contract in accordance with Government's basic overall design and performance require- ments, to specifications to be approved by Government, and in accordance with Government's "Requirements to be met for a single-contract arrangement for the Mass Transit Railway" dated 30th August, 1973 (with the exception of Requirement V(S) thereof) and the Consortium's response thereto dated 27th September, 1973 and on the basis of the correspondence and agreed records of meetings between the Group and the Consortium subject, however, to paragraph 4 below (with particular reference to the correspondence and agreed records identified in Appendix "A" annexed hereto).

4.

Detailed designs and specifications for the Railway shall be prepared by the Consortium to an agreed programme for approval by Government and, subject to compliance with the basic overall design and performance requirements, Government's approval of such designs and specifications will not be un- reasonably withheld.

5.

Government's required maximum ceiling price of HK$5,000 million must not be exceeded except in the case of loss incurred by the Consortium arising from :-

Mr. H. Sakamaki,

Managing Director

Mitsubishi Corporation

(on behalf of the Japanese Consortium)

SECRET