CONFIDENTIAL
CONFIDENTIAL
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HKD 406/2
м
kur
RFC
12 JAN 1993
IB
TO DESKBY 08003OZ BTCTLONG KONG
FM FCO
TELNO 2
OF 071859Z JAN 93
४
12
033761 MDHOAN 6948
TOP COPY Q DIST ?/
FUTURE CONSULATE GENERAL: BUDGET IMPLICATIONS
1.
MR HUM CHAIRED A MEETING OF THE STEERING COMMITTEE ON THE FUTURE CONSULATE GENERAL ON 6 JANUARY. THE MEETING DISCUSSED SPECIAL CONDITION 14 OF THE PTG (ABOUT WHICH WE SHALL BE TELEGRAPHING SEPARATELY AFTER CONSULTING MINISTERS), AND OED PRESENTED THE LATEST ESTIMATES ON THE COST OF THE NEW BUILDING.
2.
AS YOU ARE AWARE, THE CURRENT BUILDING ESTIMATE IS SUBSTANTIALLY HIGHER THAN OUR PES BUDGET FIGURE. PART OF THIS INCREASE IS DUE TO THE RECENT DEVALUATION OF STERLING, BUT THE SCOPE OF THE BUILDING HAS INCREASED SINCE THE FIRST PES BID, AND SOME DESIGN CHANGES HAVE BEEN NECESSARY, RESULTING IN EXTRA COSTS OF SOME 4 MILLION POUNDS. THE STEERING COMMITTEE DISCUSSED THREE OPTIONS FOR MEETING, OR REDUCING, THESE EXTRA COSTS. OPTION A WAS TO ASK THE TREASURY FOR ADDITIONAL FUNDS, OPTION B WAS TO REDUCE THE SIZE OF THE BUILDING AND OPTION C WAS FOR OED TO PROVIDE A CONTRIBUTION OUT OF ITS CAPITAL BUDGET FOR THE REST OF THE WORLD.
3. ON A, OED ADVISED THAT THE TREASURY MIGHT BE PREPARED TO MEET THE EXTRA COSTS ATTRIBUTABLE TO STERLING DEVALUATION, BUT WOULD BE UNLIKELY TO AGREE TO PROVIDE ALL THE EXTRA FUNDS NEEDED. IN ORDER TO SECURE ANY MORE FROM THE TREASURY IT WOULD BE PRUDENT TO SEEK SAVINGS IN THE BUILDING COSTS BEFORE ASKING THEM FOR A CONTRIBUTION. ON OPTION C, OED SAID THAT THEY WOULD BE ABLE TO PROVIDE SOME MONEY TO OFFSET COSTS BUT THAT THEY WERE UNDER THE SAME BUDGETARY CONSTRAINTS AS EVERYONE ELSE. THE STEERING GROUP CONCLUDED WITH REGRET THAT A COMBINATION OF ALL THREE OPTIONS WOULD BE NEEDED.
4.
OED IDENTIFIED THE FOLLOWING OPTIONS FOR REDUCING BUILDING COSTS:
(I) DELETING THE CAR PARK ON THE BRITISH COUNCIL SIDE,
(II) DELETING THE RESIDENTIAL COMPONENT OF THE CONSULATE
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