TNAG-1158-FCO40-1438-Visit-by-Margaret-Thatcher--UK-Prime-Minister--to-Hong-Kong--1982 — Page 130

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station boilers only. A series of shrinking results over the years to 1981

reflected the lack of major orders between the sizeable Littlebrook contract

in 1973 and the Heysham and Torness AGR work awarded last April. NEIPE

received contracts for 80% of the boiler work for both stations.

5. The long-term future of NEIPE is not assured, it is equipped mainly to pro- duce pipework for AGRS and repairs to FBRS. Work on Heysham and Torness will

AGR

last beyond 1984 but thereafter, having no/export prospects, the company remains dependent on a home market which favours the PWR option for the near future.

Issues for Discussion

6. Given the nature of this occasion, the company intends mainly general dis-

cussion on the position and prospects of NEI Ltd.

should be aware of the following specific issues:

However, the Prime Minister

7.

(1) Export Position

Competition in the export market is severe. Although UK companies are

generally competitive with European and US manufacturers, all face extreme

pressure from Japan in third markets. The NEI group is currently in conter-

tion for a number of overseas power plant projects with active HMG support,

outstanding among which and highlighted in the company's brief is the Indian

super thermal power station - the interest of NEI Projects Ltd. As the Prime

Minister may recall, in February HMG presented to the Government of India

revised generous financial proposals for a major coal-fired power station at

Singrauli II with its associated open cast coal mine and transmission lines.

At the same time, NEI submitted revised proposals; they expect to be called

to discuss these in detail in early March. Initial reactions are that the

price is too high to the embarrassment of the Indian authority as well as

ourselves. Their evaluation is based on tenders received in June-September last year (our prices are January 1981) for World Bank financed stations

which, they argue, were strictly comparable. The boilers, which account

for nearly half the total UK content, are about twice as expensive as the

Indian authority would expect. NEI are aware of the gravity of this criti-

cism.

They should have a new price before they go out for technical discus-

sion. We have appointed a firm of consulting engineers to advise HMG on the

suitability and the competitiveness of the UK proposals.

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