CONFIDENTIAL
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the UK, Hong Kong and the People's Republic of China (PRC) in a period when re-
assurance over the future of Hong Kong will be important given the expiry in 1997
of the lease on the New Territories. While the UK can supply the bulk of the
necessary plant and equipment, we cannot supply the heart of the station - the
pressurised water reactor and the remainder of the nuclear steam supply system
representing about 15% of the total project cost. A partnership with a FWR
Framatome (French) or Westinghouse (American) are the front runners
manufacturer
- would therefore be necessary. The French position on non-proliferation is
similar to our own and while there are some doubts about the US Government's
attitude to the sale of nuclear equipment direct from the United States, Westinghouse
would be able to supply from one of their licencees outside the USA. Both have
indicated their willingness to work with the UK in this way. Although the final
decision rests with the Chinese the UK's chances of maximising its own share of
the contract will be helped if we can present a well-prepared package to them in
good time.
The UK Position
4.
The UK provided technical support to CLP from Dr Walter Marshall (Chairman
of UKAEA) and partly as a result of his efforts the UK has the possibility of
gaining a major share of the project. CLP favour a substantial UK involvement in
the project.
Both the French and the American companies currently appear to
perceive the UK as being the front runners to win a major share. The Government
of Hong Kong, naturally, supports the UK's interest as UK participation would be
arguably the best way to meet its requirement for safety and continuity of supply
of electricity.
5. The UK's negotiating position is based upon the need for the nuclear power
station to be partly financed by the sale of electricity to Hong Kong. This in
CONFIDENTIAL