Kod hid Li

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(ii) Large-scale supplies

9.

3

The KEIB asked CLP if they could supply a further 200 mw by September 1979. CLP are keen to do what they can to assist in the 4 modernisations' programme. However, under their present development plans CLP could not supply this amount of power on a continuous basis until 1982/83, when their new 400 kv transmission circuit would be completed, and the first new 350 mw generator would be. commissioned at station 'B' of Tap Shek Kok.

10.

CLP reckon that the very low level of electricity consumption in Guangdong (estimated at 155 units per capita per annum) could easily triple in the near future to 450 units per capita p.a. Consumption at this level would require 2500 3000 mw of power. (Guangdong's present installed capacity is about 2000 mw).

11.

If any of the additional demand from Guangdong was to be met by CLP, they would need to advance their investment programme. Because of the way in which the

profit control scheme works, this would involve subsidisation of the supplies to China by Hong Kong consumers, which would be unacceptable to the Hong Kong Government. CLP have therefore decided that it would be necessary to form a separate company to supply China.

12.

During the recent visit to Hong Kong by Mr. Varley, CLP proposed that the UK should install the three 660 mw units designed for the UK power station Drax 'B' at CLP/KESCO's station 'B' site at Tap Shek Kok, for commissioning in 1983/84/5. They would be operated by the proposed new generating company, for the main purpose of supplying China. (Any surplus output would be made available to HK consumers.) CLP suggested that this arrangement would be of value to the UK Government in a number of political and commercial ways, and would help cement relations between UK and China. CIP said that the financial arrangements involved in such a deal would be more acceptable (and secure) than those involved in selling a power station to China.

CONFIDENTIAL ##

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