TNAG-0855-FCO40-1065-Construction-of-underground-railway-system-in-Hong-Kong-1979 — Page 154

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INDEX

OFFICER

PA

(15)

BRITISH OVERSEAS TRADE BOARD

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DEPARTMENT OF TRADE

I VICTORIA STREET

LONDON SWIH OET

TELEPHONE DIRECT LINE 01 215 5701

Acte Inte

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SWITCHBOARD 01 215 7877

22 January 1979

A J Lippitt Esq Department of Industry Ashdown House

No

Pein

Tyln,

MASS TRANSIT RAILWAY, HONG KONG

I have this morning spoken on the telephone to Tony Sansome of Metro Cam and to Derek March about the competition on the Mass Transit Railway. ine position is that Thompson and Ridley of the Mass Transit Corporation intend to complete the appraisal of bids for the multiple electrical units for phase 2 by Thursday of this week. This means that any additional price reduction that Metro Cam may be able to achieve needs to be written into the documents by close of play on Wednesday London time. Derek March indeed would like to be able to explain what we can or cannot do to his contacts in Hong Kong tomorrow. Derek tells me that there is an Indus telegram on its way to you suggesting that some of the money which was assembled to assist the KCR bid is still available and might be used by Metro Cam on Mass Transit. Tony Sansome tells me that the would not want to use any resources still available to him for KCR on Mass Transit since he may still have to live with a situation on KCR in which no progress payments are available to him. Tony Sansome himself believes that he would be put into the position to reduce the tender price by US$6m out of the 10m at which we are aiming were he allowed to draw down on day one the whole of the loan for phase 2. Malcolm Stephens is considering whether this would be possible and, if it were possible, whether it would have the effect which Tony Sansome expects. All concerned think that there is no way in which the unused amount of the loan for phase 1 could be turned to advantage. The difficulty is especially with the Mass Transit Corporation who would not be able to explain adequately to their full board what was happening.

I understand that the Governor will be telegraphing to the FCO about the political importance of the contract but this still leaves it with us at this end to think of a way if we can of assisting Netro Cam.

I tried to discover whether a ploy which produced a price reduction

Sansome's of less than the full $10m might still be enough. impression is that we might live with a reduction of a less sum. There are good technical reasons for the Mass Transit Corporation

Obviously too to stay with the same supplier as for phase 1.

Sansome political and other considerations have some weight. tells me that it is also important that our hand, if we have one, should only be disclosed at the last moment because otherwise the would tip friends of the Japanese and Jardines are among them - them off and enable them to reduce their bid yet further.

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