BACKGROUND
GUANGDONG NUCLEAR PROJECT
CONFIDENTIAL
1.
The Prime Minister is familiar with this project to build a
2 x 950 MW Pressurised Water Reactor nuclear power station in
Guangdong Province, and the Minister for Trade Mr Channon reported
the latest position to her on 20 November before the Anglo-French
summit.
JOINT VENTURE AGREEMENT
2. Progress has been delayed on the formation of the joint venture
customer by the concern of Exxon Corporation, who have a 60 per cent shareholding in CLP's main power stations, that CLP's agreement to take power from the Guangdong station could prejudice its own investment. In the face of Chinese unwillingness to compromise on
the amount of power to be taken, the problem had to be resolved
internally between CLP and Exxon. A formula was agreed in early
November, since when there has been good progress between CLP and
the Chinese towards agreeing the terms of the Joint Venture. But
resolution of the dispute with Exxon required considerable effort by Lord Kadoorie in particular, and it would be helpful if the Prime
Minsiter could confirm to the Chinese CLP's commitment
project.
to the
3. The Chinese at one stage suggested that the Joint Venture
agreement might be signed during the Prime Minister's visit.
However, there is still considerable detail to be negotiated; moreover the approval of the Executive Council in Hong Kong is required, and EXCO is not due to consider the agreements until 3 January. The Chinese have been told that signature during the visit would be difficult and have said that they would not wish to press
the point.
TIMETABLE FOR NEGOTIATIONS/EXPIRY OF FINANCE OFFER
4.
In an attempt to hasten negotiations, both we and the French told the Chinese last September that the 9 per cent interest rate in our offer could not be held beyond 15 January when the Consensus
rate is due to be reviewed. But there is no reasonble prospect of