CODE 18.77
DRAFT
1 PS/Mr Baker
PS/Secretary of State
CONFIDENTIAL
с с
Reference.........
PS/Mr MacGregor PS/Secretary
Mr Manzie
Mr Benjamin
Mr Havelock
GUANGDONG POWER PROJECT
ISSUES
1 The Secretary of State will wish to report to the Prime Minister on the recent visit to the UK by the delegation from the Guangdong Power Company (GPC) and the China Light and Power Company (CLP). (In the recent correspondence with Lord Kadoorie, the Prime Minister said that she would look forward to seeing the report of the visit.) The Secretary of State will also wish to outline to the Prime Minister the next steps to be taken in seeking to secure maximum UK involvement in the project.
VISIT TO THE UK BY THE DELEGATION FROM GPC AND CLP
2 The delgation, consisting of senior officials from both companies, visited the UK from 13-25 March. The visit was made at the invitation of GEC. At the request of the Chinese the visit focussed on the conven- tional island for the proposed power plant: the Chinese stated emphati- cally at a number of points in the visit that they did not wish to discuss the nuclear island.
3 The first week of the visit concentrated on GEC's technical and manufacturing capabilities and the UK's record in the power plant field. The delegation visited a number of GEC works, a number of CEGB power stations including the AGR nuclear station at Heysham where they met members of the National Nuclear Corporation and British Nuclear Fuels Limited. The second week of the visit concentrated on financial dis- cussions with Government and GEC's merchant bank, Schroders. At the conclusion of the visit Mr Baker held a meeting with the delegation, and a Government reception and dinner were provided with Mr MacGregor and Mr Rees acting as hosts. Throughout the visit the delegation was accom→ panied by a representative of the Chinese Embassy and representatives of the Bank of China attended the financial discussions.
4 The delegation appeared to have been impressed by the technical presentations and manufacturing facilities of GEC. This favourable reaction was reinforced by seeing GEC equipment in operation in CEGB power stations. We believe that the Chinese now accept that the large high speed turbines which GEC are offering would be suitable for the project.
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5 In the financing discussions we pressed the delegation for clari- fication on the timing of the project, the choice of nuclear partner, and the proposed financial structure of the operating company. Chinese gave no clear answer on timing: a decision in principle to proceed might be taken perhaps this year, perhaps next. On the choice of nuclear partner, in formal discussions the Chinese reiterated that they were considering the options origimally contemplated over two years ago in the feasibility study for the project, namely Westinghouse,