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the department for Enterprise
Secretary of State is of course in correspondence with colleagues about these issues.
10. The Provisional Airport Authority in Hong Kong is finalising its business plan before opening formal discussions with the commercial banks and the credit agencies. The PAA said they would seek general indications about the overall level of support from the credit agencies which could influence the award of contracts. It seems clear that they
would like some general indication that ECGD cover was available up to a stated ceiling: this was driven by concern that the project should not run out of credit at a late stage, and by the PAA's awareness that as a new body they might be less attractive than other Hong Kong entities such as China Light and Power (Black Point) or the Mass Transit Railway Corporation (for the new rail link to the airport) which are well established with excellent track records.
11. An overall ceiling of this kind would have to be set at a high level, and would score against ECGD's budget from the date of its inception, thus tending to crowd out other business as the cost of reserving cover for airport business which might not materialise. It would aggravate the difficulty of securing wider Whitehall agreement cover for particular projects and would also make it more difficult to factor in the very substantial repayments expected from Hong Kong over the coming years. We accordingly encouraged the PAA to accept that it would be preferable to proceed on a project by project basis. We took the same line with the Hong Kong Government's senior financial advisers, who were inclined to think that the PAA's approach was unrealistic and would not be welcome to other export credit agencies. But the PAA may push the point and other export credit agencies may respond more sympathetically simply because they are less exposed in Hong Kong than ECGD. We are in touch with ECGD separately about this point.
12. So far as concerns Black Point, Mr Clancy of Exxon repeated the line he had taken in London: that he would want to be able to capitalise interest payments and to repay the loans over an extended period.
13. Apart from giving me a first-hand impression of what is probably our single largest project market, my visit did, I hope, underline British government interest in the opportunities and support for our companies. Hong Kong is undoubtedly an open market, and one where questions of aid and ATP do not arise. Simply because the Hong Kong authorities
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