CONFIDENTIAL
MKK 166/1
RECEIVED IN REGISTRY
03 JAN1986
DESK OFFICER INDEX
From:
J Ashton
Date:
REGISTRY
PA
Action Taken
CC:
2 January 1985 PS/Mr Renton Sir W Harding Dr Wilson
TRED
HKD
Се
8/1
Mr Masefield
PS
News Dept WED
A
alroced
B
GUANGDONG NUCLEAR PROJECT
1. The Secretary of State may wish to be aware of developments since Mr Orr minuted on 23 December.
2. GEC finally reached agreement on contract price with the Joint Venture Company (JVC) on 30 December. The £5m gap which had separated the two sides was closed with £3.75m from GEC and £1.25m from the JVC. The agreement will be enshrined in a Memorandum of Understanding to be signed in Peking on 3 January. The core contract will now be worth around £211m to GEC; inflation and optional items yet to be negotiated will almost certainly raise this above £250m. DTI judge that GEC will be left with a minimum of profit, but will nevertheless be pleased, given the effort they have invested, the work the project will bring them, and its high international status.
3. A team led by Mr Benjamin of the DTI will arrive in Peking on 3 January to resume negotiations on the financial package. The remaining differences seem unlikely to be insuperable. Mr Benjamin now has a mandate to make a revised offer on premium comparable to the French position (as requested in Mr Channon's minute of 24 December). The Chinese have also reiterated a
allocled long standing request that HMG underwrite GEC's performance,
C
to
cover the cost of any delay in the successful installation of equipment. We have offered, and cannot go beyond, a letter of comfort from ECGD promising to look sympathetically at any such problems which arise.
Press Aspects
4. Intense press interest is developing following a Chinese press report referring to agreements with both France and Britain
(Peking telegram no Indus 1). Both GEC and the DTI intend to issue their own press releases today: I attach the text of the latter. News Department should refer queries to the DTI press office.
John Ashton
J Ashton
Far Eastern Department
CONFIDENTIAL
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