TNAG-0636-FCO40-784-Supplies-of-electricity-for-Hong-Kong-1977 — Page 40

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COMMERCIAL IN CONFIDENCE

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I stated that the proposals which were set out in Mr Iippitt's telex were based upon four principles. First, British manufacturing companies should demonstrate a capability to, take on the whole of a ten year energy programme for Hong Kong, within which the power station would form the first element. Secondly, the Department of Industry should be closely involved in putting the package together, by identifying specific companies to take on the major items of work and by remaining involved in the subsequent negotiations even though it was impossible for HMG to be a contracting party. I explained that my Department had presumed that CLP was looking for a single main contractor; since HMG was unable itself to take on such a role, some time had been spent on seeking to establish whether any UK firm could do so. I was now clear that CLP did not want a turnkey project if it could not be taken on by HMG. Thirdly, the CEGB and NCB should be involved as much as possible: 1 emphasise that Mr Bonner, Deputy Chairman, CEGB, had expressed a willingness in principle for the CEGB to be involved in any way that might assist British companies win the contract. Fourthly, the package would have to be financially attractive to CLP. I could not be more informative on the last point as much would depend on the approach used.

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6 To complete my introductory remarks, I made two final points. First, that Mr Gemmill was present because the Department of Industry had retained Lazards as financial advisers in respect of this work. Lezards were advising the Government: they were not acting on behalf of potential contractors. Secondly, I had been concerned to hear that Balfour Beatty had made a direct approach to CLP. I emphasised that, so far as we were concerned, the channel of communication led from the Department of Industry (possibly through the British Trade Commission) to Sir Lawrence Kadoorie. I wished Sir Lawrence to disregard entirely the message which Balfour Beatty had sent. We could not prevent individual companies making direct contact with CLP if they were determined to do so. But if a similar incident occured in the future, I hoped Sir Lawrence would get in touch with Mr March (SBTC), who would give him guidance.

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In discussion the following points were made:

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while CLP/PEPCO had agreed to pursue the possibility of a negotiated contract with Britain, they had also agreed that no action should be taken at this stage which would make it impossible for them to go to international tender at a later stage. Sir Lawrence, therefore, had been careful to avoid any direct discussions with potential suppliers.

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