TNAG-0770-FCO40-974-Construction-of-underground-railway-system-in-Hong-Kong-1978 — Page 219

EX/

avno.

ART

CREDITS

ANTIPARTM

Miss J Kelley HM Treasury Parliament Street

London SW1P 3AG

EXPORT CREDITS GUARANTEE DEPARTMENT

feels

Pk Stewart.

দি

Telephoto 01:606 6699

The deal seems

to have been dunched.

#KK17311

Aldermanbury House

Aldermanbury

London, EC2P 2EL

CELINER IN REGISTRY NO. SI 28 FEB 1978

IN EX

No

OFFICER

Telex: 883601

24 February 1978 TRY

PA

Action Take

1) var Jean.

येऊ

HONG KONG MASS TRANSIT RAILWAY CORPORATION

1

Seef

Norman Thompson of MTRC saw Ken Cotterill and Bob Kemp this morning and was pleased to receive our confirmation that in principle we would be willing to support the financing for the UK supply for the total requirement for phase 2 in either US or HK dollars, support for the latter being conditional on the Hong Kong banks making dollars available on terms comparable with those offered for the 70 car option and to market conditions in Hong Kong being similar to those pertaining to-day.

2 Following this assurance he now seems confident that his board will confirm the placing of the 70 railcar option with MetCam and this contract should now be concluded quickly.

3

The possible procurement from the UK for phase 2 has been suggested as:-

Railcars (150)

£6 Ou

Signalling & Control Equipment -

Westinghouse

GEC Rectifiers & Power Transmission Workshop Equipment (Vickers)

£ 5m

£1 Om

2 5m

Civil Engineering contracts

£20

-

£40m

£120m

4

We have indicated terms of 85% financing over & years from mean delivery at a fixed interest rate of 72% and Thompson seems to have accepted that he is unlikely to persuade any competitors to breach the Consensus on length of credit. He is however aware that he is likely to obtain some financing for local cost elements for the civil engineering contracts and in due course we may have to approach you for authority to offer 15% of locals in relation to any UK tenders.

5

MTRC's intention is to place the first civil engineering contract in October

The whole of the electrical and the remaining 10 contracts in the course of 1979. and mechanical requirement will be placed at the same time in January/February 1979.

6 Thompson had made it quite clear that the board's willingness to see the HetCam option contract taken up was dependent on our assurance that we would provide support on a similar basis for their phase 2 requirement as otherwise they consider that their ability to goncrate serious competition, particularly for the railcars, has been prejudiced by the award of the additional 70 car contract before the tendering for the phase 2 requirement. I was most grateful for your

1