Our Ref: 3/19/7/32
RE Adams, Esq
5.
However, if it is considered that there is an enhanced subsidy risk. for non-standard currencies it seems sensible to consider any request for a lower Consensus rate to apply only in the light of up-dated calculations on projected subsidy differentials between the currency concerned and the appropriate standard currency. These could show, for example, that relative projected rates have moved so much in the interim period that the lower Consensus rate can only be agreed on the basis of an interest rate loading.
6. In the case of Hong Kong dollars I would be very surprised if the up-dated subsidy calculations indicated a need for such a loading but if you agree that we should go through this process, I would be grateful if you would confirm that this is so.
In his letter Ray Dunn quoted a figure of £70m as the UK content; this has now been revised down to £20m but with locals will bring Lilley's share up to £50m.
7.
8. Following the decrease in Consensus rates we have also received requests from Metro-Cammell Ltd in respect of their contract to supply railcars to MTRC (my letter to you of 16 October 1985 and yours of 28 October 1985 refers) and from Kowloon Canton Railway Corporation (KCRC) in respect of the Tuen Mun sub-contracts (Mrs Case's letter of 5 August 1985 to Ken Inglis (DTI) refers) to be offered the new lower rates and I would appreciate your views on what should be done in these cases also.
We have been asked by Lilley to give an urgent reply to their request as they have to report back to Hong Kong early next week. We would therefore be grateful if this matter could be given your urgent consideration.
9.
Yang lincantly Ahavani
M Sherwani
cc: T JH Downing
BOE
M Baker
DTI
K Inglis
DTI
Mr Dodd
DOE (Romney House)
D J Hall
DTI (OT4)
A A Joy
FCO
R A Ludford
ODA
2
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