GR 430
PRIORITY
CHER/CAT A
HONG
FM HONG KONG 100915Z
*
CONFIDENTI AL
HKK164)
42 A 1978
•
CONFIDENTIAL
INDEX
TO PRIORITY F.C.O TELNO.451 OF 10 APRIL 78.
PERSONAL FOR P.U.S FROM GOVERNOR.
7800
-
Take
See 85191
1. SIR LAWRENCE KADOORIE WILL BE IN LONDON FROM 9 19 APRIL.
HE WILL SIGN THE FINANCIAL AGREEMENT RELATING TO THE CONTRACT
FOR THE NEW POWER STATION.
2. HE MAINTAINS THAT PROVISION OF A NEW TRANSMISSION SYSTEM
WAS AN INTEGRAL PART OF THE NEW PROJECT AND SHOULD BE ON THE
SAME TERMS AS THE POWER STATION. IT HAS NOT BEEN FOSSIBLE TO FINALISE THE TERMS BECAUSE THE SITE FOR THE POWER STATION, AND CONSEQUENTLY THE TRANSMISSION REQUIREMENTS, HAVE ONLY BEEN DECIDED COMPARATIVELY RECENTLY. NEVERTHELESS THERE IS EVEN
MORE MONEY IN THE TRANSMISSION CONTRACT THAN IN THAT FOR THE POWER STATION, AND I UNDERSTAND THAT THE POSSIBILITIES OF SPIN-OFF IN EXPORTS TO THIRD COUNTRIES ARE GREATER.
3. LIPPITT OF THE D.0.1 HAS EXPLAINED TO SIR LAWRENCE THAT AT
THIS STAGE WHILE IT IS POSSIBLE TO GIVE AN ASSURANCE THAT THE
FINANCIAL TERMS FOR THE TRANSMISSION SYSTEM WILL BE ''BROADLY
SIMILAR TO THOSE FOR THE POWER STATION HE CANNOT GO FURTHER.
UNFORTUNATELY KADCORIE HAS THE IMPRESSION THAT THERE MAY BE
DIFFICULTIES: AND THAT E.C.G.D WILL REQUIRE ADDITIONAL GUARANTEES :
AND THAT PROVISION OF COVER FOR SUCH A LARGE ADDITIONAL EXPORT
WOULD INVOLVE RAISING E.C.G.D'S CEILING FOR HONG KONG.
4. KADOORIE'S IMPRESSION IS PROBABLY CORRECT IN THE SHORT TERM,
THOUGH NO DOUBT THE ISSUES COULD ALL BE RESOLVED THROUGH
NORMAL CHANNELS GIVEN TIME, BUT A GREAT DEAL IS AT STAKE AND
KADOORIE NEEDS TO KNOW WHERE HE STANDS, THAT IS TO SAY THE
ESSENTIALS OF THE FINANCIAL TERMS FOR THE TRANSMISSION PACKAGE.
AS HE SAYS ''A POWER STATION WITHOUT A TRANSMISSION SYSTEM
IS LIKE A MOTORCAR WITHOUT WHEELS', AND SUMITOMO WOULD PROVIDE
THE SYSTEM AND THE FINANCE AT THE DROP OF A HAT.
CONFIDENTIAL
/5. I AM MOST
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