TNAG-0617-FCO40-765-Strength-and-cost-of-UK-armed-forces-stationed-in-Hong-Kong-1977 — Page 34

CONFIDENTIAL

this, and suitable appropriation in aid has also been assumed.

17. Despite adequate provision having been made in the forward costings

for replacement vessels, their place in the future programme cannot be

regarded as secure until the whole programme has been reviewed in the light

of our position in PESC.

LINE TO TAKE WITH THE HONG KONG GOVERNMENT

18.

Towards the end of this year it will be necessary to enter into forma).

communication with the Hong Kong Government in order to obtain their

agreement to proceeding with plans for the rercement vessels. It is proposed

to take the following line:-

a.

It is understood that the Hong Kong Government agree with the stated

role (paragraph 7), and that they agree in general terms that the 5

existing parol craft should be replaced by broadly similar vessels.

b. The broad order of capital cost of the replacement vessels is

likely to be M 15 to £M 20 which, it is hoped, will be acceptable to

the Hong Kong Government (paragraph 16).

C.

That on the understanding reached in February 1976, the Hong Kong

Government would pay 75%, and HMG 25%, on the capital cost, in line

with the terms of the DCA (paragraph 4).

d. That the replacement vessels would be the sole property of HMG

(paragraph 4).

e. That the capital cost comprises the full re-provision cost including

overheads (such as R & D, design work

) and that the

exact figure will depend upon such factors as place of build and detail ed

characteristics of the vessels.

7 CONFIDENTIAL

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