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Discussed.
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KELEIVED IN REGISTRY NO. 51
13 AUG 1980
OFFICER
REGISTRY Action Taken
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later minute 318 See later
GUANGDONG NUCLEAR PROJECT
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On the record of Sir Lawrence Kadoorie's call on the LPS you asked about DOI thinking on Sir Lawrence's proposal that the British and Hong Kong Governments should take equity holdings in a company acting as joint owners of the operators of the proposed nuclear power station.
2. I attended a meeting in the DOI today at which this and other related matters were discussed. The position is as follows. Sir Lawrence saw the Prime Minister, the LPS and the Secretary of State for Industry last week. Records of these meetings are attached. You will see that Ministers generally welcomed the project. The Prime Minister said that we must not let the opportunity slip. There is thus strong Ministerial support in principle but on the detailed proposals for government partici- pation and underwriting of accident liability no undertakings have been made. Sir Lawrence would like a decision on these points quickly but this is not going to be easy. In the first place, cash is involved. The expected value of shares in the Hong Kong company would total US$160 million. It is hoped that private Hong Kong interests would take up the bulk of thse and that the Hong Kong Government would be prepared to make at least a token contribution. The DOI have certainly not ruled out HMG partici- pation but they would like this share also to be relatively small.
3. Accident liability is likely to be a greater problem. The Chinese would like the Hong Kong and UK Governments to underwrite a substantial share of the risks in case of an accident of the 'three mile island' type. The risk will have to be very carefully assessed and the DOI will also have to consider whether our liability, if any, should cover only damage in Hong Kong (which should be a considerable distance from the site) or extend to China as well.
4. The next step will be for the DOI to prepare a draft policy paper for Ministers which they will clear with us and other Departments, including the Treasury who have not been brought in yet.
This should be ready by about the beginning of September.
Political Issues
5.
We have already minuted on 30 July with the department's assessment of the political implications of the project. In discussion with Sir Lawrence Kadoorie, Ministers have commented in general terms without specifically endorsing Sir Lawrence's analysis. Nevertheless I think there is a risk that, simply because he has been received by the Prime Minister and two members of the Cabinet, who have expressed general interest in and support for his ideas, Sir Lawrence will gain the impression that HMG accepts that the nuclear power project is likely to
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