TNAG-0635-FCO40-783-Supplies-of-electricity-for-Hong-Kong-1977 — Page 129

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CONFIDENTIAL

Reference......

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Mr Milton Lois

Mr Stewart

HONG KONG: POWER STATION PROJECT

NOTE OF A DISCUSSION WITH MEMBERS OF DOI AND DOT

احداه

1. Mr Lippitt gave a round-up of the present state of play.

Mr Stones of Chima Light and Power is due in England on 2 May and Mr Havelock will be meeting GEC and Babcock and Willcox to decide on the approach to be made to Mr Stone. Following this meeting and the advice of Mr Havelock, a further meeting will be called. Sir Lawrence Kadoorie would like to have HMG involved in negotiations with the GEC. The tender will probably be GEC Rugby, GEC Stanhope Gate and Babcock and Willcox. GEC may not wish to lead and may wish to tender separately but the DOI will argue for a composite tender which is what Hong Kong wants. R A Parsons are at present in Hong Kong discussing CLP's requirements but the strong likelihood is that GEC will in any case take over Parsons. The only block to the take over is the attitude of the unions, but if the

Tuguark inting unions do not agree then Parsons will disappear as an industrial

entity.

Cicerned, 2. Mr Lippitt thought that the possibility of sales of mining

if

is laying to stop this.

Dizy

machinery to China and the deal whereby China would supply coal for Hong Kong was a myth. In any case, the nature and quality of the coal would need to be known. He suggested that a telegram should be sent to Hong Kong and Peking asking them to enquire into this and whether the Chinese actually need mining machinery and also whether they would need electricity. The DOI will prepare a and f telegram in consultation with the DOT and myself.

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3. Sir Peter Carey thought that Lord Rhodes should be kept out of the discussion but it was agreed that if he pressed for information then Mr Havelock of the DOI would see him.

4.

It was decided that the DOI would ask the Hong Kong Government to guarantee any finances made available to CLP but Kadoorie has not yet worked out how he will finance his new plant.

5. GEC want use of the Overseas Project Fund and the DOT said that it could be given to only one group - either GEC or Parsons. An application has been received from GEC but Parsons are going to be asked if they also were going to apply. Mr Lippitt thought that GEC should be told that their application would be accepted since he thought there was a degree of inhibition in GEC rebentering into this project and therefore they should be given all possible inducement. It seems that doubts were expressed about Babcock's expertise but others present from the DOI thought that Babcock had the necessary expertise for power plants. Mr Lippitt asked why we could not put pressure on the Government of Hong Kong to purchase British goods as the French did with their colonies in order to make the latter by French goods. I pointed out the different circumstances of Hong Kong and also that despite the greater degre independence which Hong Kong had in commercial and economic affairs, HMG did in fact put pressure on them to purchase British goods for the Mass Transit Railway.

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CODE 18 - 17

CONFIDENTIAL

16. Mr Lippitt