6.2
Sale of Electricity to Hong Kong.
The borrowing and repayment of foreign loans by the Guangdong Nuclear Power Company had been worked out on the basis of sale of electricity to Hong Kong.
The letter attached to the Feasibility Study Report mentioned that this sale was subject to the approval of the Hong Kong Government since CLP was a public utility in Hong Kong, operating under the scheme of
control.
Mr. Chen said that such a condition was understandable. However since the financing of the project was dependent on the sale of electricity to Hong Kong, it would be necessary to obtain the view of the Hong Kong Government. In place of the purchasing contract between CLP and GPC, would the Hong Kong Government be willing to guarantee the purchase by granting a purchasing licence to CLP.
The Reviewing Board advised that if there was no certainty for the sale of electricity to CL, then this project would not be feasible.
The two points mentioned above, viz 6.1 and 6.2 were the two major points on which the Reviewing Board sought further clarification.
6.3
6.3.1
6.3.2
(a)
Other questions on the Economic Report.
Mr. Chen said that lengthy question and answer sessions took place with the tax authorities. He said he was mentioning these only to up date Mr. Stones on the procedures which had been gone through, and he was not asking for reconsideration of things previously agreed.
It was pointed out that the Nuclear Power Station was economically advantageous to CLP since the power so generated would be cheaper than that of a coal fired plant. This was so because price increases were allowed.
For GPC on the other hand, the price of electricity was fixed, and a loss was incurred in its sale. The difference was however made up by reimbursement from taxation revenues. When the books were finally balanced, there was a small profit for GPC. It was felt that having borrowed so heavily and put in such efforts, GPC was only able to have 30% - 40% of the power generated from the nuclear power station accompanied by a small profit.
Parameters assumed in the Economics Section of the Feasibility Study Report.
An interest rate of 7.5% was assumed in the Feasibility Report. The Reviewing Board pointed out that in actual international practice, handling charges and other fees would be added on to make it closer to 8%. Doubts were expressed in respect of the 7.5% interest rate assumed.