TNAG-0766-FCO40-970-Supplies-of-electrical-power-for-Hong-Kong-Castle-Peak-power-1978 — Page 136

Mr Quantrill

HKKHACH

Mr Stewart agull

CONFIDENTIAL

1.1973

lagull jals

ER

HONG KONG POWER STATION PROJECT

These

Reference

مكنهم

have been

passed to the Flaccherald who has accepted them.

S 6

راه

1. I have some comments on the attached letter and its enclosures.

2. On the question of Chinese coal, I would suggest that point (ii) in the letter should come first and that the present point (i) could be expressed better as: "to strengthen the already good relations between the People's Republic of China, Hong Kong and HMG". This has been agreed with FED.

2. On the same subject, I suggest the following wording for the last point in the background briefing: "CLP/Exxon are now considering sources of coal for their new power station. They estimate that some 32 millions tons per year will be needed. Discussions have been initiated with potential suppliers, including the Chinese". This form of words was agreed between Peking, BTC Hong Kong, FED and ourselves in December; the DOI received copies of the telegrams. I have confirmed that FED are still happy with this form of words.

3. My other comments concern the implication, on two occasions in the enclosures, that the deal was"rigged". The first point in the background note strongly suggests this; Lf any mention is to be made of the Prime Minister's involvement I would prefer that it be in the form: "The Prime Minister expressed his interest in this contract to Sir Lawrence Kadoorie when they met on 30 March 1977. In supplementary question 11 the use of the phrase "allowed to enter into" would be regrettable. I would suggest instead "involved in".

4.

CLP is currently facing criticism in Hong Kong because of reports that it will be passing on the costs of capital expansion to consumers. It is therefore important that we should give no suggestion of any complicity in preventing international tendering since this could be construed as having added to the cost.

5. My understanding of the reference to the CPRS Review is that it is the report on the power generation industry, commissioned at the time of the proposed merger between GEC and Parsons.

CODE 18-77

SS 10/76

ໆ

agree

empren

6.1.78.

inth to Thompson's comments. In particular

we must avoid giving any

one in Hong Kong the impression that CLP have been manoeuvred by the UK into buying equipment that was more expensive that it might otherwise have been - with the Hong Kong consumer being left to pick up the tab.

W. E. Quantill of

1