TNAG-0638-FCO40-786-Supplies-of-electricity-for-Hong-Kong-1977 — Page 191

From the Minister of State

Alan Williams

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The Rt Hon Joel Barnett Esq

Chief Secretary to the Treasury

HM Treasury

Parliament Street

LONDON SW1

لله

EF

Department of Industry

Millbank Tower

London SWIP 4QU

Telephone Direct Line 01-211

Switchboard 01-211 3000

19 September 1977

3 for 145

3688

Hem Joel.

HONG KONG POWER STATION PROJECT

HKGD

f

PS

PS/LE ROBERTS P3/PU3 MR. CORTAZZI Me. MURRAY

FED TRED

In my letter of 1 August, I set out the broad lines of the proposals my Department was developing in respect of this project. Since then:

i

we have received formal tender documents from

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iv

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GEC who now propose to act as main contractor with Babcock and Wilcox (boilers) and Mouchel and Partners (civil engineering designs) as sub-contractors for the power station development. We hope to receive proposals from Balfour Beatty, the other contractor, within the next few days;

the GEC and Babcock prices have been reviewed in detail on our behalf by RTZ, who have commented that in UK terms the prices quoted are very competitive. At our request GEC are now examining the scope for a further cut in their price but this is bound to be small and we wish to reserve it to concede in the course of the detailed negotiations;

discussions with ECGD and the Bank of England in London and with the Hong Kong banking community suggest that, while many points of detail still have to be resolved, there appear to be no insuperable difficulties to an offer of buyer credit in Hong Kong dollars;

officials from this Department have had discussions with Treasury officials on the provision of the services and experience of the Central Electricity Generating Board. We expect the CEGB services to cost, at 1977 prices, between £4m and £5m between now and 1984. While the arrangements for making payments to the CEGB still have to be settled, I hope the Treasury will agree in principle that we may provide these services.

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