2
Kadoorie and Gordon stressed that China Light would not be prepared to accept a financial commitment in excess of HK$100 million. There was no question of China Light being involved in the issue of guarantees or sharing in overrun costs. They were only prepared to buy electricity if its cost was less than that generated in Hong Kong. They were not prepared to move from this position in any way. While Kadoorie was cut of the room arranging some photostat copies, Gordon said that as far as he was concerned he would prefer the nuclear project to be dropped, if other parties wished it to go ahead it was up to them to supply the additional support that would not be available from China Light.
I said that most of the problems arose because it had been proposed by China Light that HKNIC would take a 40% shareholding in GNPS. This was obviously very attractive to the Chinese since they felt that this involved HKNIC accepting 40% of all risks involved in the project.
I asked why it was necessary for HKNIC to have a 40% shareholding. Why could this not be reduced to say 10%? Neither Kadoorie nor Gordon were able to explain why it was necessary to have 40% or why this percentage had been suggested in the first place. They had never of course envisaged at the time that this would involve taking a 40% risk on the project. They did not see any reason other than a question of face why the shareholding should not be reduced to 10%. I said that if this could be achieved it was possible that the lenders would be prepared to accept a 90% Bank of China guarantee supported by the China Light offtake agreement as the principal elements of the security package.
Stones, Poon and Bischoff
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Stones explained that the visit to GEC had been very satisfactory. There were a number of minor problems concerning length of blades but other than that the Chinese were well satisfied with their visit.
He was pleased to see that after an almost disasterous start the British Government were now taking the project seriously. He was concerned that maybe HMG had been worried because the GPC/CLP team had not included senior representatives from Beijing.
He had had a long de-briefing session with Chen Gang on the Sunday following his return from London. Chen Gang was clearly happy that HMG had said they would match terms offered by competitors. He wondered whether they could get improved commercial terms if arranged independently from the export credits. Stones said he had explained that CAPCO had been able to obtain more favourable commercial teras only as part of an overall package.