TNAG-0636-FCO40-784-Supplies-of-electricity-for-Hong-Kong-1977 — Page 127

CONFIDENTIAL

In hinten Dian

Faucet

2015

()

RE

MR LIPPITT

31 MAY 1977

HKK 164/1

HONG KONG POWER STATION PROJECT

51

cc: Mr Bullock

Mr Baker Ind Adv Mr Clark MEPT

Miss Mueller IC Mr Havelock MEPT

Mr Roberto CRE Mr Mingay G

Mr Mann ECGD

Mr Morphet Energy

Mr Bryant OFG Mr Battersby IP Mr Jane Treasury Mr Stewart FCO /

My Havelock, Mr Baker and I discussed the Hong Kong power station project with Mr Rooney (Chairman and Managing Director, Balfour Beatty), and two senior executives (Mr Odell and Mr Coxon)yesterday morning.

2 Balfour Beatty had heard of the project from a conversation which the marketing director of BICC, their parent company, had last week with Sir Iawrence Kadoorie in Hong Kong. Throughout yesterday's discussion, Balfour Beatty showed a keen interest in the project. At first they maintained that they would not be prepared to act as main contractor for a contract exceeding £150m or so, although they would be willing to consider a higher figure if they were involved in a joint venture with another industrial company. When the Department indicated (following Sir Peter Thornton's agreement as Accounting Officer) that the Government would be prepared to offer insurance to the main contractor against the failure of a sub-contractor, along the lines offered in respect of the Al Jubail contract, Balfour Beatty said that they would be prepared to consider seriously acting as main contractor for the project.

3 Balfour Beatty made it clear that their acceptance of

a main contractor role would be dependent upon a number of factors:

(a)

(b)

@

that there should be relatively few sub-contractors, each of whose contracts should have broadly equal value;

that they should not be put at considerable financial risk from the failure of a sub-contractor;

(c) that they should be able to involve the CEGB in

those areas where they themselves did not have a capability;