TNAG-0769-FCO40-973-Supplies-of-electrical-power-for-Hong-Kong-Castle-Peak-power-1978 — Page 127

NOTE FOR FILE

HKK 164 VALITE

CONFI

PA

284

27/x

Mr Malaren 1037/0 Mr Samuel (FET))

RICER

INDEX

PA

Astion Teken

have taken

HONG KONG ELASTRIG POTENTIAL UK NDERS

G

كيب

a

fale 27/02/6/x

General

Mr Lippitt and I had a discussion to lay with Mr S 1. Chen Manager of Hong Kong Electric, and Dr C H Cosling Director of BICC Power Cables.

In the course of discussion, the following main issues were covered;-

(a)

(b)

(c)

(a)

Mr Chen confirmed that HKE would welcome the possibility of negotiating a UK package for the cable link between Lamina and Hong Kong. In saying this, he had the support of Mr Partridge his Chief Executive - though he had been cautioned not to go too far in discussions on the detail. It was envisaged that BICC would be the lead company.

TAG A

It was agreed that the possibility would be further explored during Mr Lippitt's forthcoming visit to Hong Kong the UK side would have prepared by then an outline of such a package, though initially purely for discussion purposes and not negotiation. Dr Gosling would himself attend so as not to disrupt the attention of other BICC staff who would be actively engaged on the negotiations with CLP.

Particular aspects touched-on were:-

(i) The financing package would be a crucial element,

and for this IK would be looking for a quotation in dollars Ik and for credit terms extending probably no more than 5-6 years. Mr Chen confirmed that the company was very liquid and with a sound capital structure.

(ii) HKE would be looking to the financing to be arranged

by a London associate of the Hong Kong and Shanghai Bank A Gibbs (it was explained that HIIG retained Lazards as advisers, though without ruling out the possibility of the latter becoming the chosen banking instrument if a client wished - but otherwise, Lazards staff would in effect be part of the Dol team).

(iii) HKE had an active consultancy wing, which itself

was undertaking work in Saudi Arabia, and would therefore not require the same BEI support as CLP equally, this would not rule out BEI being engaged within the BICC contractual arrangements providing, as would be reasonably expected, sensible working relationships could be worked out.

For safety and environmental reasons it appeard that an under-water cable would be needed, and this raised the special problem of protection against ships drifting at anchor. The Hong Kong Government would not tolerate an overhead tranmission line solution. Where was dosultory spurring about the Japanese babit of submitting suicidal prices and the fact that the Japanese cable manufacturers were known to be under pressure to fulfil

some

KETA, PAGTUT AT