TNAG-0564-FCO40-659-Construction-of-an-underground-railway-system-in-Hong-Kong-1975 — Page 138

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whatsoever that this will be counter-productive. Having decided to put the scheme out to competitive international tender, the Lass Transit Corporation would lay itself open to very considerable criticism if it appeared to favour British companies. In addition, the Corporation will have to have regard to the viability of the scheme and award contracts to those firms it believes will give it best value for money and a guarantee of ability to perform. Lord Nelson brought this subject up also during our discussion.

He too had formed the opinion, independently, that the approach to the project had to be a straightforward commercial one with support from H... Government rather than the liong Kong Government. 3. Feelings here about the scheme are very mixed. There is a strong element ano ng the Taipans (Jardines excepted) that takes the view that liong Kong can not afford the scheme and I believe Some of them may be forming up to tell the Governor just this. the other hand the Government is convinced that the scheme must ahead if liong Kong's traffic problem is not to get out of hand. senior Government officer has put it to me that what the Goverment can not say is that it will, in the interests of the greater good, be obliged one way or another to ensure that the sceheme is viable and this probably mean coordination of all forms of transport as an outright subsidy can be ruled out. A debate on the cost and viability of the scheme is now out in the open. It started with the circulation of the attached gossip sheet (Derek Jones, Secretary for Economic Services confirms that Wilbur Smith has done a survey, but that the report is inaccurate in many respects and takes Wilbur Smith's findings out of context) and was extended by opposition to the project by one member of Legislative Council when the lass Transit Corporation Bill was debated earlier this week.

This was followed by a statement by Thompson, made at the request of the Government; I enclose the press reports. liaddon-Cave will obviously have to make a similar statement when the debate is resumed. All this will, I hope, help to clarify the financial considerations. Thompson remains convinced that the scheme will be proceeded with and the larger the Corporation grows, the greater its lobbying influence with the Government. Ridley, the Chief Engineer of the Corporation has a wide range of experience, both academic and practical, of transport problems and it is significant that Thompson in his statement referred to the need to integrate all forms of public transport. From conversations I have had with him, I am quite sure he will be pressing this point to ensure that the project proceeds.

4. Provided, therefore, the bids the Corporation gets in answer to the representative tenders are in line with its estimates, it seas very unlikely to me that the project will be dropped on the grounds that it is not viable. The main stumbling block is likely to be raising the money for that part of the project which is not covered by supplier credits. As I reported in my telegram Sandberg believes this, while difficult, will not be impossible.

5. Thompson will be starting in London on 12 May and spend the next three weeks with Haddon-Čave calling on bankers and credit

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