TNAG-0772-FCO40-976-Modernisation-and-electrification-of-the-Kowloon-Canton-Rail-1978 — Page 81

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TELEGRAM NUMBER CREDA 328 OF 03 NOVEMBER.

PERSONAL FOR KNIGHTON DEPUTY SECRETARY CRE.

YOUR TELNO CREDA 181 : METCAM AND THE KOWLOON-CANTON RAILWAY (KCR).

1.

ROYCE'S MESSAGE HAS CROSSED WITH MY CREDA TELNOS 326 AND 327. THERE HAS BEEN A FURTHER DEVELOPMENT THIS MORNING. SAMUELS, TRANSMARK'S LOCAL REPRESENTATIVE ACTING UNDER TELEPHONE INSTRUCTIONS

FROM KEN SMITH, HAS JUST CALLED TO PUT ME IN THE PICTURE ON A STRICTLY PERSONAL AND CONFIDENTIAL BASIS. HE CONFIRMED THE PRICE INFORMATION IN MY CREDA TELNO 327 BUT WAS OF COURSE UNAWARE THAT IT WAS ALREADY IN MY POSSIESSION. I GLEANED THE FOLLOWING ADDITIONAL INFORMATION.

2.

TRANSMARK ARE EMBARRASSED NOT ONLY BECAUSE THE BRITISH BID IS THE HIGHEST BUT BECAUSE THEIR ESTIMATE FRO THE COST OF THE . ROLLING STOCK ON WHICH THE HONG KONG GOVERNMENT BASED THEIR -DECISION TO GO AHEAD WAS ONLY HK DOLLARS 289 MILLION WHEREAS

EVEN THE SUICIDAL JAPANESE BID IS HK DOLLARS 400 MILLION. AS THE

ROLLING STOCK REPRESENTS 52 PERCENT OF THE TOTAL PROJECT COST THE HONG KONG GOVERNMENT'S FINANCE COMMITTEE IS HAVING DOUBTS ABOUT

THE SPEED WITH WHICH THE PROJECT IS BEING RUSHED AHEAD. THIS NO DOUBTA ACCOUNTS FOR SUGGESTED OPTION 3 IN PARA 3 OF MY TELNO CREDA 327. THE DISCREPANCY IS DOUBLY EMBARRASSING BECAUSE BREMETRO AND METCAM APPEAR TO HAVE BEEN CONSULTED BY TRANSMARK

BEFORE THE ESTIMATES WERE SUBMITTED.

3. SAMUELS AGREED WITH MY SUGGESTION THAT THE GAP BETWEEN THE JAPANESE AND BRITISH PRICE PROBABLY REPRESENTED THE DIFFERENCES

IN INFLATION RATE. THE KCR TENDER EXTENDS OVER A 32 MONTH PERIOD, AND CALLED FOR FIXED PRICE BIDS. ONLY 10 PERCENT IS PAYABLE AT THE D

DESIGN STAGE AND IT WILL BE MID-1980 BEFORE THE SUPPLIER BEGINS TO RECEIVE APPRECIABLE PAYMENTS, TRANSMARK ESTIMATES