TNAG-0938-FCO40-1157-Visit-of-John-Nott--Secretary-of-State-for-Trade--to-Hong-Ko-1980 — Page 266

CONFIDENTIAL

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Background Note No 5

BRIEF FOR VISIT TO HONG KONG BY SECRETARY OF STATE 25-30 JANUARY 1980

BRIEF BY BCGD ON EXPORT CREDIT

الم

1

LINE TO TAKE IF RAISED

2

a The full range of ECGD facilities is available to support UK exports to Hong Kong.

b ECGD believes that the terms it supports are broadly competitive with those available from other credit-insurers.

C ECGD has supported a substantial amount of medium/long term business with Hong Kong and despite the already large commitment is prepared to consider cover for further new business.

d

New UK investment in Hong Kong is eligible for support under the Investment Insurance Scheme. Full normal cover against political risks is available.

BACKGROUND

a

Hong Kong is graded 'A' in ECGD's four grade system and attracts the most favourable rates of premium.

b

}

Normal short term cover (up to 180 days) is available without restriction. (short term commitments total £54m).

C

Medium/long term cover is available subject to a reviewable limit This limit on total commitments under Section 1 (Commercial Account).

was introduced in February 1979 when demand for cover was building up from the generally modest level of past years.

Large contracts valued at over 250m are covered under Section 2. The current position is:-

LIMIT

COMMITMENTS

£178m

SECTION 1 (COMMERCIAL ACCOUNT)

SECTION 2 (NATIONAL INTEREST)

£500m

No formal restrictions £650m

PROJECT BUSINESS

d

Hong Kong has been an exceptionally active buyer credit market over the past two years with UK companies, greatly assisted by HMG, obtaining exceptionally large orders in the power generator, transmission and rail transport fields. The Chairman of China Light and Fower (CLP)

Sir Lawrence Kadoorie gave the UK the opportunity to achieve a negotiated contract for a 2 x 350 MW dual fired power station which was to be owned by a newly formed buyer, The Kowloon Electricity Supply Company (KESCO) in which GLP had a 40% interest the balance being held by ESO. GRC secured a £149 contract in April 1973 and subsequently obtained orders for six Gas Turbines worth a further £30m. Recently KESCO have exercised an option to purchase 2 further 350 M/ units costing 2125m and in Farch 1979 Balfour Beatty secured a contract from CLP for a £100m transmission line.

CONFIDE TILAL