TNAG-0635-FCO40-783-Supplies-of-electricity-for-Hong-Kong-1977 — Page 157

CONFIDENTIAL

BRIEF FOR THE

MEETINGS OF MINISTER OF

AND SIR PETER CAREY WITH

SIR

STATE (MR WILLIAMS)

LAWRENCE KADOORIE ON 30

30 MARCH

Tasked

BACKGROUND

Sir Lawrence Kadoorie is Chairman of the China Light and Power Company (CLP). He will be accompanied by Mr. Stone (ex CEGB), Chief Engineer to the company and general manager of the Tsing Yi power station.

CLP is one of two generating utilities in Hong Kong; the other

Hong Kong Electric covers only Hong Kong Island. In the past CLP- has bought its power generating equipment from GEC and Clarke

Chapman by direct contract. Hong Kong Electric buys Japanese.

OBJECT OF THE VISIT

The object of the visit is to discuss a new 3 x 350MW coal

fired station, Castle Peak, to be commissioned between 1982 and

1987 at a cost of about £150M. Sir Lawrence would like CLP to

continue its policy of buying British. While this is based to a degree on sentiment it stems from his appreciation both of the political need for the ties between Britain and Hong Kong to be seen to be strong and of the importance of stimulating British exports in the interests of Hong Kong's trade with Britain. Support for the Castle Peak project would be a further step in strengthening UK commercial and political links with Hong Kong.

The lease of the new Territories expires in 1997 and doubtless some time before that the UK will enter negotiations with China

the DO! (c) about Hong Kong's future. The Chinese are thought not to want

to adit a Hong Kong dominated by American and Japanese capital. It has thair

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been suggested that CLP could supply the Chinese with electricity in exchange for coal to fire the new power station.

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PROPOSAL FOR A NEGOTIATED CONTRACT

Sir Lawrence has said that his difficulty is that in normal circumstances the cost of British equipment is about 20% higher in price than Japanese. He needs to persuade his Board to buy British and to avoid public criticism which would follow if the

Japanese publicised the fact that they could have provided the plant at a cheaper price. He will need to sign a contract