TNAG-0636-FCO40-784-Supplies-of-electricity-for-Hong-Kong-1977 — Page 44

COMMERCIAL IN CONFIDENCE

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Schroder and Chartered asked whether the buyer credit could be repaid on a fluctuating basis which reflected the fluctuations in the revenues which the purchasing company would receive under the proposed new Scheme of Control. We indicated that this would not be acceptable. After the mecting we agreed that in the formal British offer we might have to put forward some arrangement whereby CLP/PEPCO could have access to stand-by credit to cover downward fluctuations/;

The Hong Kong representatives maintained that they were not particularly concerned whether British interests invested in the new purchasing company or not. If British companies did wish

to participate then they would have to pay a premium for doing so.

MEETING WITH SIR LAWRENCE KADOORIE ON TUESDAY 14 JUNE, AT 11.30 am

Before we met Schroder and Chartered, I had heard that Sir Lawrence Kadoorie wished to have a private word with me later that moming. Mr March (BTC) was present for part of the discussion. Mir Gemmill joined Sir Lawrence and myself for lunch.

2 Sir Lawrence said that the meeting the previous day had been very satisfacotry insofar as it had clarified several matters that were causing him concern. On the other hand, the proposals in Mr Lippitt's telegram, as clarified by myself the previous evening, "did not go nearly far enough". Sir Lawrence's view, "what was missing so far, and what will be necessary if any proposal is to be accepted, is a new approach".

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3 What Sir Lawrence had in mind was that the Government should offer through the CEGB the same planning and expertise which had been put forward by Balfour Beatty. (In his remarks Sir Lawrence limited discussion to the design of a new power station and it was left unclear whether Sir Lawrence had in mind that the CEGB should also be responsible for the oversight of the construction of the works. Our discussion was entirely on the basis that the CEGB should be involved in the design of the power station.) Sir Lawrence had been given to understand that some 180,000 man hours of engineering would be required to design a new power station. Sir Lawrence considered that the inclusion of the CEGB as the designers of the power station could be presented as semi-Government involvement which would form part of a "new approach". More important,

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