TNAG-0638-FCO40-786-Supplies-of-electricity-for-Hong-Kong-1977 — Page 46

PP BTC HONG KONG

GR 130

HISK 12, 1616/1

EDEC

TREA

CYPHER CAT A

FM DTI 291640Z

HUSD

Joey

NO

250

CONFIDENTIAL

TO PRIORITY BTC HONG KONG TEL NO CREDA 370 OF 29 NOVEMBER

YOUR CREDA 289: POWER STATION PROJECT

DRAFT LETTER OF INTENT WAS TAKEN BY GOLDSMITH (ELECTROWATT) TO HONG KONG ON SATURDAY. YOUR

COPY BEING SENT BY BAG.

(251

2. LETTER OF INTENT WILL, WE HOPE, BE BASED ON FIFTEEN OR SO VOLUMES OF MATERIAL SENT BY GEC AT VARIOUS STAGES. IT WILL NOT BE A FORMAL POWER STATION CONTRACT. LATTER DOCUMENT WILL BE SUBJECT OF DETAILED NEGOTIATION BETWEEN RESPECTIVE PARTIES EARLY IN NEW YEAR. IT WOULD THEREFORE BE INAPPROPRIATE FOR CEGB CONTRACTS SIDE TO BE PRESENT AT FORTHCOMING HONG KONG DISCUSSIONS. IN ANY CASE WE DO NOT SEE HOW CEGB CONTRACTS PERSONNEL CAN BE PRESENT AT DISCUSSIONS WITHOUT IN FACT BEING DRAWN INTO GIVING ADVICE ON COMMERCIAL MATTERS. WE REMAIN OF VIEW THAT WHILE CEGB SERVICES SHOULD BE MADE AVAILABLE ON TECHNICAL MATTERS THEY SHOULD NOT REPEAT NOT BE

AVAILABLE ON COMMERCIAL ASPECTS.

3. FOR YOUR BACKGROUND INFORMATION CEGB HAS HAD NO EXPERIENCE OF NEGOTIATING EXPORT CONTRACTS: IT HAS NO APPRECIATION OF IMPLICATIONS OF ECGD ARRANGEMENTS: NOR OF WAY NATURE OF CONTRACT (FOB OR CIF WITH PART OR FULL ERECTION) WILL AFFECT PERFORMANCE GUARANTEES ETC. QUOTE THE BEST CEGB STYLE UNQUOTE SOUGHT BY STONES IS FAR MORE DEMANDING OF CONTRACTOR THAN ANY EXPORT BUYER EVER LOOKS FOR. THIS COULD BE ACHIEVED BY UK COMPANIES ONLY AT EXPENSE OF ADDING TO THE PRICE (WHICH MIGHT HAVE PERTURBING IMPLICATIONS FOR OUR COMPETITIVENESS).

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