TNAG-0636-FCO40-784-Supplies-of-electricity-for-Hong-Kong-1977 — Page 129

P.A jeles

MR LIFPITT

RECEN

31 MAY 977

HKK 16+

CONFIDENKIAL

flr is good to be That Trazandr

Trazando have

}

whaillen hr Doffey

(43)

pretty good

been looking unto the "r lumbay This looks isallow to clonely but I fear that that are still a lot of parts to

Diam

Good. Return to

HKOD

HONG KONG POWER STATION PROJECT

3/5-

co: Mr Bullock

Mr Paker

to mil

Mr Clark MEPT Miss Mueller IC Mr Havelock KEPT Mr Roberts CRE Mr Mingay G Mr Mann ECGD Mr Stewart FCO Mr Morphet Energy Mr Bryant OPG Mr Battersby IP Mr Lane Treasury Mr Hewes IC1 Mr Field IC2

fals

Mr Hewes and I went this afternoon to discuss with lazards how a financial package might be put together in respect of this project that might commend itself to Sir Lawrence Kadoorie and the CLP Board.

2 I attach a note which Iazards presented to us at the outset of our discussion. This note is prepared in the form of a telex which the Government would send to Hong Kong. The main financial features are as follows:

(a)

(b)

(c)

the British companies GEC; Babcock & Wilcox; Weir; Balfour Beatty should set up a consortium company (ABC) which would supply the power station and other facilities to a new Hong Kong company (XYZ) whose shareholders would be CLP, PEPCO and ABC itself. (If one company agreed to act as main contractor, it could, if it wished, act by itself in place of ABC);

ECGD facilities would be provided in respect of 85% of the value of the UK content of the contract price and 15% of the local content with a combined limit of 100% of the value of the UK content. The balance would be financed by the issue of shares in XYZ.

the effect of (b) above would be that all local costs would in effect be financed by the issue of shares in XYZ. These the banks would expect to be able to place, were ABC to decide not to hold them. CLP would thus have to provide the working capital required during the construction of the work.