TNAG-0639-FCO40-787-Construction-of-underground-railway-system-in-Hong-Kong-(Mas-1978 — Page 17

File Note

COMMERCIAL IN CONFIDENCE

HKK. 173

RECEIVED ..:

INDEA

10 NOV 277

Ref:

Taken

repens

HONG KONG MASS TRANSIT

Reference the "Financial Times" report of 3 November "British may miss the order boat". I had a word with Mr Leggett of OPG.

2. There is of course a distinction between the electrical and mechanical (hardware) and civil engineering contracts and the "Financial Times" report of affairs to the latter. Regrettably OPG experience has been that when they have tried to push civil engineering firms into bidding for overseas work, the response has been less than enthusiastic, and in some ways counter productive; in effect, the opportunities are put before British companies but their commercial judgement is the final arbiter.

3. On the electrical and mechanical requirements for Stage II, both GEC and Metcam possess a significant advantage from their Stage I commitment. Regrettably following the combined GEC/Metcam bid for the Caracas underground, which was away out on price, GEC blamed Metcam for high coach prices while Metcam blamed GEC for high motor prices. For the current Mexico City underground business, GEC are linking up with French collaborators while Metcam are bidding separately with other associates. At this stage neither are getting OPG financial assistance but if it became clear later that one was clearly the UK front runner their bid could qualify for help.

4. The "Financial Times" report, somewhat alarmist in tone, could be a ploy by the mass transit authorities to keep up the pressure for better financial terms through ECGD.

J Ashwood

CRE 4

tel 215 5280

4 November 1977

Houg Kang Dapt

c.c. Mr Thompson

Mr March

4

-

FCO

Hong Kong