TNAG-2266-FCO40-3263-Richard-Allen--Chief-Executive-of-the-Hong-Kong-Provisional--1991 — Page 28

CONFIDENTIAL

ECGD Cover (Not for disclosure)

6.

Mr Allen will be discussing project finance in detail

with Mr Sainsbury and separately with DTI officials and

Mr Malcolm Stevens (ECGD) later this week. ECGD cover for

Hong Kong is subject to a Market Exposure Control of £3

billion of which £900m is currently unutilised. Commitments

of cover for Hong Kong must also be accommodated within the

Annual Global Business Budget of which £1.3bn currently

remains available for this financial year. Treasury

authority is required for individual projects of £100m or

more, and cumulative annual commitments in any one market of

£200m or more. Since Treasury has indicated that it will resist new commitments in excess of £200m in any one year

this is likely to be more of a constraint on the level of

support for the project than the Market Exposure Control.

However, the proposed new power station development by China

Light and Power (at Black Point) may well exacerbate the

competition for ECGD support.

Airport Design Contract

7.

Pre-qualfication for this contract closes later this

month. British companies contending include BAA, Maunsell, WS Atkins, RMJM, Scott Kirkpatrick. Allen does not favour

BAA (they are linked to Norman Foster, who is remembered in

Hong Kong for cost and time overun on HKSB building). BAA have already been awarded two small consultancies.

Legal and Financial Advisers

8.

The PAA plan to appoint legal and financial advisers for the project. There is a strong US contender for legal advisers but the remainder are British. Proposals for financial advisers will also be made soon and a number of US bankers are already in the field, as are several British including Hambros, Schroders, Wardleys and possibly Barings. Barclays have impressed Allen and he will be seeing them during this visit.

BRIAFR/3

CONFIDENTIAL