TNAG-0637-FCO40-785-Supplies-of-electricity-for-Hong-Kong-1977 — Page 84

CONFIDENTIAL

ii

iii

iv

V

equipment as necessary eg transmission lines.

The CEGB is advising us on the scope of the equipment required (a three man CEGB team spent last week with CLP in Hong Kong for this purpose) and on the technical aspects of the UK proposals.

Role of the Department of Industry. Besides nominating particular contractors, the Department will present the package in Hong Kong and will co-ordinate the UK input into the negotiations. Sir Lawrence had indicated that he would hope to see a Government involvement in the contractual arrangements as a demonstration of the Government's commitment to Hong Kong. Sir Lawrence has mentioned the possibility of the NEB taking a shareholding in a new company that brought together the main contractors.

We are not convinced that this is preferable to an arrangement whereby the Department co-ordinates the negotiation of contracts with individual suppliers (an NEB involvement in the way suggested could add to the cost of the equipment).

Provision of CEGB services. We hope to include in the package the provision of the services of the CEGB, both in respect of design work and of staff to help commission and operate the power station. We believe this will be a highly attractive part of our package.

Financial aspects. ECGD will be providing favourable terms. In addition we are investigating with the Bank of England, Treasury and ECGD the possibility of financing the buyer credit in Hong Kong dollars. This might provide financial advantages which could be reflected in a lower package price. If a suitable arrangement could be agreed with the Hong Kong and Shanghai Bank and the Hong Kong Government it could have an important impact as an element of originality which Sir Lawrence is seeking.

Coal from China/export of mining equipment to China. We are pursuing this via the Foreign and Commonwealth Office. HM Ambassador in Peking has indicated that the Chinese authorities display considerable interest. However, the prospects of an early contract seem remote; we do not expect to include this, except as a long term prospect, in our proposals.