TNAG-0768-FCO40-972-Supplies-of-electrical-power-for-Hong-Kong-Castle-Peak-power-1978 — Page 189

CONFIDENTIAL

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PURCHASES BUT WE WOULD WELCOME YOUR ASSURANCE ON THIS POINT, AS, YOU YOURSELF HAVE SAID, THE WHOLE CONCEPT IS ONLY PRACTICABLE WITH KESCO'S PURCHASING POWER AS A BASE. WE HOPE, OF COURSE, THAT THE BASE MAY BE EXTENDED, FOR EXAMPLE, BY THE PARTICIPATION INTER-CONTINENTAL FUELS AND I TRUST THAT YOUR DISCUSSIONS WITH

PR WARING CN THIS POSSIBILITY WENT WELL. HOWEVER, JUST AS WITHOUT ESSO'S FORMAL AGREEMENT YOU CANNOT COMMIT KESCO, HMG IN THE ABSENCE OF REASONABLY ASSURED ARRANGEMENTS FOR SELLING COAL OTHER THAN TO KESCO CANNOT MAKE SPECIFIC REFERENCE TO ICF'S

PARTICIPATION IN THIS MEMORANDUM.

4. IN PREPARING THE DRAFT MEMORANDUM, WE HAVE THROUGHOUT WORKED CLOSELY WITH BERNARD DEWE MATHEWS, WHO HAS BEEN KEEPING IN TOUCH WITH YOU AND WHO GENERALLY ACCEPTS THE APPROACH WE HAVE ADOPTED. I WOULD PARTICULARLY EMPHASISE:

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WE PROMISE INITIAL ASSESSMENT STUDIES BY THE OVERSEAS CONSULTANCY ARMS OF THE RESPECTIVE NATIONALISED INDUSTRIES WHICH WOULD ALSO BE ABLE TO FROVIDE MORE SUBSTANTIAL SERVICES AS PART OF THE BIDS OF UK MANUFACTURERS. (PARA 3).

(6) WE TRY TO NUDGE THE CHINESE TOWARDS THINKING OF CONVENTIONAL PAYMENTS MECHANISMS WITHIN THE GENERAL CONCEPT OF COMPENSATORY TRADING AND TO LEAVE AS MUCH FLEXIBILITY AS POSSIBLE ON THIS POINT. (PARA 4).

(C) WE EXPRESS THE HOPE THAT THE CHINESE WILL GIVE FAVOURABLE CONSIDERATION TO THE PARTICULAR PROPOSAL WHICH YOU HAVE MADE AND DRAW ATTENTION TO THE PARTICIPATION OF THE CEGB THROUGH BEI. (PARA 5).

5. AS TO YOUR OWN PROPOSAL. AS OUTLINED IN THE TELEX FROM SCHRODERS AND CHARTERED OF 19 JULY, I WOULD WISH TO MAKE THE FOLLOWING POINTS:-

(A) WE ARE CONTENT FOR HMG TO PRESENT IT TO THE CHINESE AND TO THE REFERENCES TO THE DEPARTMENT OF INDUSTRY AND BRITISH GOVERNMENT IN IT. IT IS FOR YOU TO SATISFY YOURSELF THAT ANY REFERENCES TO, AND CONSEQUENT COMMITMENTS FOR, OTHER UNITED KINGDOM ORGANISATIONS, PRIVATE OR PUBLIC SECTOR, ARE ACCEPTABLE TO THEM. I HAVE MENTIONED THIS POINT TO BERNARD DEVE MATHEWS.

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