090.40
PRIME MINISTER
NOCK
CONFIDENTIAL
Enter il.
896
FEC 166/1
RECEIVED IN REGIST..
D.
02 JAN 1988
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Dr. Wilson
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The Stinctam of State agrood on 25
Attembor to this
proposal; and thes were subsequently achanged
with
GUANGDONG NUCLEAR PROJECT
PERing
387
RM
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In Leon Brittan's absence, I am minuting you about this
project. Events have moved on since Leon wrote to you on
19 December. The French have reduced their export credit
premium by 45 per cent, halved their bank fees, and made some
concessions on support for local costs. They have reached
agreement with the Chinese and have signed MoUs covering the
finance package as well as the Framatome and EdF contracts.
2
The pressure is now on the UK side. Following further movement GEC still face a price gap of £5 million. A political
move may help them to settle for less than this. But in any
event we must agree to re-open financial discussions if we are to win the contract, with the French in the wings ready to take
over from GEC should we drop out. The Ambassador has
suggested, and I agree, that he should see Vice Premier Li Peng
to attempt to settle the price question on GEC's behalf, while
indicating our preparedness, in the special circumstances of
this project, to consider further moves on the financial
package in the light of the French settlement. GEC would have to bear any remaining price concessions. The Chinese have set a deadline for agreement on price, if not on finance, of
31 December and we have to decide very quickly what we are
prepared to do.
CONFIDENTIAL
1
M01AFQ