TNAG-0636-FCO40-784-Supplies-of-electricity-for-Hong-Kong-1977 — Page 14

CONFIDENTIAL

PS/Secretary of State

PS/Secretary

Mr Bullock

Mr Lippitt

Mr Clark

MEPT

Department of Industry

Millbank Tower

London SWIP 4QU

3688

Telephone Direct Line 01-211

Switchboard 01-211 3000

116

Mr Havelock MEPT

Mr Macdonald IC

RECEIVED IN

From the Minister of State

Alan Williams

the

Patrick Wright Esq Private Secretary to the

Prime Minister

10 Downing Street WHITEHALL

London

REGISTRY NO. 51 3 0 JUN 1977

of Roxx 164/1

SW1

LAST

85

Dear

131

28 June 1977

Kompling+ (ennal Dept

In willen

astips

REF.

NEXT

Patrick,

HONG KONG POWER STATION PROJECT

36.

In your letter of 3 June you said that the Prime Minister had given his approval for us to send specific proposals to Hong Kong for discussion with Sir Lawrence Kadoorie.

A Department of Industry official, accompanied by a Lazards executive, has been to Hong Kong for discussions with Sir Lawrence Kadoorie, other members of the China Light and Power board, and their financial advisers. From these discussions it is clear that Sir Lawrence is now looking to the British Government to nominate particular companies of the Government's choice which would provide the major items of the power station and for the Government to give an indication (following discussion between Government and the companies) of the price at which the power station would be supplied. A bid which was clearly uncompetitive internationally would lose us the chance of a negotiated contract. Sir Lawrence now accepts that the Department of Industry itself cannot sign a contract to supply a power station. Nevertheless, he remains concerned that Government be associated with the project possibly by the Central: Electricity Generating Board being fully involved as consultants. Sir Lawrence is not interested in a private sector organisation taking on the whole of its energy development programme on a turnkey basis.

We shall be considering urgently with the companies; CEGB; and Export Credit Guarantee Department - the issues that arose in discussion in Hong Kong. Our aim is to put fairly specific proposals, including a broad indication of price, to Sir Lawrence Kadoorie by the middle of August. We shall, of course, inform you fully of our proposals before they are put to Sir Lawrence.

I am copying this letter to Nick Monck (Treasury), Ewen Fergusson (Foreign and Commonwealth Office), Martyn Baker (Trade) and James Bretherton (Energy).

your sincerely,.

John Mues.

JOHN MILLS

Private Secretary