TNAG-0635-FCO40-783-Supplies-of-electricity-for-Hong-Kong-1977 — Page 139

The difficulty with the 'negotiated' contract approach would be to persuade CLP that GEC's bid was competitive.

The GEC prices would be keen with very little margin. Credit terms would be important, but it was expected that ECGD cover would be forthcoming. CIP also seemed to be fishing for a British Government subsidy in the form of a price reduction and/or 'industrial investment' in Hong Kong.

6 The stage reached in the approach was that GEC have already had a series of discussions with CLP but have not yet opened formal negotiations. By the first week in May they hoped to be able to send a team to Hong Kong with the outline of a possible package to. discuss details, possible pricing arrangements etc. After that there would be a further 6-8 weeks work to produce the final package which, hope- fully, would be ready for presentation in mid-June.

? There were still a large number of uncertainties which must be resolved in the next two/three months. The site of the station was not yet firm; no specification was available for the Chinese coal; it was not clear whether the desalination project would go ahead at this stage; there was doubt about how much design and engineering help CLP would require (GEC have decided to be positive on this latter point and offer a completely engineered package). Finally, there was doubt as to how far CLP was a free agent due to the 50-60% Esso interest in the parent company (PEPCO?).

8 Mr Lippitt thared the GEC representatives for the information provided. He suggested, and was agreed, that it would be mutually edvantageous to keep very closely in touch from now on. My Lippitt sind that he would arrange any further discussion whenever required, to resolve problems as they arose. Mr Havelock would be the normal point of contact. His advice was that GEC should approach the project on a normal commercial basis. He would ensure ECGD were aware of the importance of the project to the UK. If GEC thought it desirable the Department would consider having an official in Hong Kong during. the projected discussions in May and/or June.