TNAG-0855-FCO40-1065-Construction-of-underground-railway-system-in-Hong-Kong-1979 — Page 133

CONFIDENTIAL

Mr Murray

Два

tok

PS/Lord Goronwy-Roberts

HKED

+KK 143/2

72

HONG KONG: MASS TRANSIT RAILWAY

and B

No

1. It was announced in Hong Kong on 5 February that Metro- Cammell Ltd (Metcam) have been awarded a contract to supply rolling stock for the second phase of Hong Kong's new underground railway, the Mass Transit Railway. Metcam won the first phase rolling stock contract in 1976. This new contract is worth some £50 million

initially.

2.

The background to Metcam's bid was described in my submissions of 24 and 29 January. Some very deft footwork on the part of ECGD and the Departments of Trade and Industry was required to enable Metcam to match the price offered by a Japanese consortium. In the end the highly complex financing arrangements mentioned in my submission of 24 January were not pursued: the Treasury sanctioned a straight waiver of interest up to US$10 million on the buyer credit which will be made available to the Mass Transit Railway Corporation, thus directly matching the Japanese. This arrangement is described by ECGD as "quite unprecedented" and one which "will not be repeated in Hong Kong or anywhere else" (ECGD telegram No EXCED 5 to Hong Kong).

6 February 1979 Copy to:

PS/PUS

LuVaughn

R JT McLaren

Hong Kong and General Department

CONFIDENTIAL

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sawu Bahamas

for

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