TNAG-0637-FCO40-785-Supplies-of-electricity-for-Hong-Kong-1977 — Page 28

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timescale' envisaged but that by the time the new plant had been commissioned Peking would be ready to discuss the possibility again. CLP/PEPCO had replied to the effect that they would ensure that the new power station's fuelling requirements were flexible, so far as types of coal were concerned, in order to keep the possibility of fuelling with Chinese coal open. The Prime Minister told Sir Lawrence Kadoorie that Mr. Youde had called on the Chinese Vice-Minister of the Coal Industry līsu Tsai-Lien, in Peking on 20 July. Hsu was a good contact and regularly received visiting NCB delegations. He had told our Ambassador that China was keen to increase her exports of coal and was also considering her plans for the import of equipment. The State Planning Commission, according to Hsu, was engaged in preparing an overall plan and if it was decided to pursue the possibility of a deal the responsibility would then rest with the Minister of Foreign Trade. There had been some discussion of ports through which coal could be exported. Hsu had referred to Chinwangtao in the north and also to Lien Yunkang. He had ruled out the possibility of exporting 700,000 tons of coal in 1982 if this requirement were placed upon his Ministry by the Planning Commission. Hsu had referred with approval to the equipment which the Chinese had already imported from the UK. The Prime Minister commented that all this showed that the Chinese were doing some serious I thinking about the proposition.

Sir Lawrence Kadoorie agreed. He said that the port facilities which might be offered would have to include a loading pier and facilities to take bulk carriers of at least 100,000 tons dispiacement. Sir Lawrence then turned to the question of finance. He said that it was important that payment should be in Hong Kong dollars. CLP/PEPCO hoped to arrange matters so that a fixed sum would be payable for each unit of electricity sold. The equipment in the package, for the sale of which the premission of the Hong Kong Government would be sought, would also be paid for in Hong Kong dollars. In view of the soundness of the Hong Kong dollar Sir Lawrence commented that perhaps it was too sound this was a key element in the whole package deal. The Prime Minister said that the Departments concerned in London were looking into this aspect of the problem; the proposed method of finance could perhaps lower the price of the package as a whole.

Sir Lawrence Kadoorie went on to say that it was in his view essential that the British Government should demonstrate its continuing interest in and responsibility for the Hong Kong power programme. Mr. Callaghan's own personal interest had been invaluable. It was necessary that the UK should show that its interest in the programme was long term and that the British wore not interested only in a one-off sale. The Prime Minister agreed that the Government's long term interest should be emphasised; Mr. Youde would stress this in his exchanges with the Chinese in Peking. Sir Lawrence Kadoorie said that the project was conceived in terms of a ten year period. was possible that the best method of proceeding might be by the formation of a separate UK company;

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