TNAG-1662-FCO40-2310-Hong-Kong-Western-Harbour-Lantau-Strategic-Development-proje-1987 — Page 66

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(c) It could be argued that Shenzhen and the Hopewell- sponsored project in Hong Kong were in competition. The UK interest was in maximising the content of UK goods and services and it was unclear at this stage which project would yield the better return.

(d) The Hong Kong project, if realised, was likely to

be done on a commercial basis without need of UK aid funds. The high probability was that ATP would be needed in support of a Shenzhen airport project.

(e) We could give no indication that ATP would be available, if needed.

(f)

No UK group had yet pulled off a major BOOT project overseas, let alone in China. In its favour, Shenzhen airport would generate foreign exchange and the central PRC Government and Bank of China were likely to be involved in the deal. Even so, ECGD and Lender Bank requirements for short-fall and other guarantees were likely to be exacting.

I gave Mr Hillier no commitment that OPF would be available but indicated that it would not be impossible to back two horses if we could be persuaded that they were not in quite the same race or if we could be persuaded that although only one project would materialise and we could thus expect repayment of only one OPF contribution, the prospects for major projects business would be increased if we were to support British groups bidding for two airport projects.

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are,

It is to the credit of Halcrow and their colleagues that they had taken the initiative and got together with a contractor/ equity investor and an airport supplier and banker and have tagged on to Llewelyn-Davies whose study was funded by the ODA. They have clearly done a lot of work in developing their ideas and selling them to the Chinese. Halcrow, however, as consultants,

I summise, not really aware of what they are letting them- selves in for in promoting a BOOT project in China, let alone one which might be complicated by China/Hong Kong conflicting interests. I suggested to Mr Hillier that when he returns from China he should come in to see us again together with Trafalgar House and Plessey. Despite the claims of the Mayor of Shenzhen that decisions to proceed will be taken by the end of the year, this looks like being a long one, but

long one, but one worth following. The project already has quite a long history with

British Airports International bidding for and failing to secure the feasibility study. I would be surprised if they did not show interest in the project proper if it looks like materialising.

PP.

K.

FRANK WHEELER

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