TNAG-0636-FCO40-784-Supplies-of-electricity-for-Hong-Kong-1977 — Page 108

CODE 18 - 717

MR LIPPITT

CONFIDENTIAL

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HONG KONG POWER STATION PROJECT

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Ls below

-1 0.1977

1

(KK 16+/

This minute records the discussions we have had with GEC and Balfour Beatty in the course of the last day.

2 Last night Mr Havelock, Mr Baker and I met Mr Jackson and Mr Scott (CEC, Stanhope Gate) and Mr Davidson and

Mr Cronin (GEC, Rúgby). The following points were made by GEC:

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i The company was not prepared to act as main

contractor for the entire package, comprising power station, pump storage scheme and desalination plant;

GEC were prepared to act as main contractor for the power station alone and, subject to certain conditions (which we did not go into in detail) to act as sub-contractor to another company if the latter was prepared to act as main contractor for the complete package;

In GEC's view it was preferable for British. industry to offer four or five companies, each of which was capable of carrying out a discrete part of the deal, rather than have one private sector company which would act as main contractor for the entire package;

GEC felt strongly that Sir Lawrence Kadoorie was looking for an input from the Government rather than from the private sector. The ideal way of achieving this would be for the National Enterprise Board or for the CEGB to act as main contractor, and to take the risks involved in this, while making separate arrangements with each of the sub-contractors;

If a Government vehicle was not possible, the best approach might be for China Light and Power to set up a new purchasing company (XYZ) which would have available a project line of credit and for

the British companies to negotiate separate contracts with it.

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3 This morning Mr Baker and I met Mr Odell and Mr Hobson (Balfour Beatty), who made the following points in discussion: