CONFIDENTIAL
acement is conditioned on the UK contract being above £10m; and on the HK dollars being available on no worse terms (i.e. margins on base lending rates. etc.) than were envisaged for the total package. Conditions would be maintained at 7% interest and an 81⁄2 year term from date of commissioning since the normal start date for this sort of contract would be completion of civil works, which is presumably yet earlier).
8.
7
Mr. Birch did not see any scope for improving this offer, which was a very good one for a civil engineering contract. Since the UK content was so small in relation to the whole, ECGD would not wish to offer credit insurance (as opposed to an insurance-backed loan) on the HK contract.
On loan security, Mr. Birch believed that a bank guarantee would now have to be required in relation to this partial package, since the Japanese would presumably get one for the major parts of the work which they had wrested from us. Arguments about comparability with CLP no longer applied, since the overall package as such had been rejected. However he was content that our formal position with HEC should remain that we were ready to consider whatever security proposals they should put forward, but in the expectation that only a guarantee would in fact be found to suffice.
II CHINA LIGHT AND POWER (CLP) CONTRACTS
9
TRANSMISSION SYSTEM
The timetable for signature of the CLP/Balfour Beatty and CLP BEI contracts had slipped, due to continuing problems during negotiations on the terms of the contracts. latest dates were: -
(i) BEI contract signature (UK) 23 March
The
(necessitating CLP Board approval by 12 March) (ii) Balfour Beatty contract signature (Hong Kong) -
26 March (contract then coming to UK by 28)
(iii) Loan agreement signature (UK) 30 March.
Mr.
10. The major outstanding issue on the CLP/BEI contractis the amount of BEI services to be provided at no charge to CLP. CLP now claim that their issue of a Letter of Intent to Balfour Beatty was on the understanding that BET services would be provided throughout the extended programme of works, despite the fact that the programme was only formally extended to finish in 1986 rather than 1984 after the
· Department and BEI had left Hong Kong in mid-November Havelock has firmly opposed this interpretation, in thè knowledge that CLP's own advisers, Electrowatt, recognise that the scope of services so far agreed between us is limited to that presented by BEI in their draft contract, i.e. ending in 1984. (Electrowatt, on the other hand, appear to have encouraged CLP to try to extend these services throughout the contract.) This may be quite a problem, and the BEI Director concerned, Mr. Alan Weaving, is ready to travel to Hong Kong if necessary.
CONFIDENTIAL
of the first / unit not the of commissioning's
merum Late
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