TNAG-0767-FCO40-971-Supplies-of-electrical-power-for-Hong-Kong-Castle-Peak-power-1978 — Page 69

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2. AS STATED IN MY INDUS 61, KADOORIE IS DETERMINED THAT KESCO SHOULD NOT HAVE TO BUY COAL FROM A MIDDLE-MAN. HE RELUCTANTLY

ACCEPTS THAT HIS ORGANISATION MAY HAVE TO TAKE ON A LIMITE TRADING HOUSE ROLE (IF ONLY TO KEEP OUT OTHER HONG KONG ENTREPRENEURS, IN PARTICULAR, JARDINES) BUT HE CLEARLY WANTS TO KEEP THIS TO A MINIMUM. AS KESCO WILL NOT NEED TO PURCHASE

COAL BEFORE 1981, HE ACCEPTS THAT SOME FORM OF FINANCIAL BRIDGING DEAL WILL BE REQUIRED TO COVER ANY INTERIM SALES OF BRITISH

EQUIPMENT.

3. KADOORIE WELCOMES THE NEWS THAT YOU ARE PREPARING PROPOSALS

WHICH WOULD BE DISCUSSED WITH HIM IN HONG KONG BEFORE PRESENTATION TO THE CHINESE. WE SHOULD WELCOME AN OUTLINE OF YOUR PRESENT THINKING TO ENSURE THAT THEY TAKE ACCOUNT OF KADOORIE'S PRELIM-

INARY VIEWS.

4. YOU SHOULD KNOW THAT THE CHINESE WERE SWIFT TO FOLLOW UP

KADOORIE'S SUGGESTION THAT CLP MIGHT ESTABLISH A LINK WITH THE KWANGTUNG PROVINCE POWER GRID (SEE PARA 2 OF PEKING'S RECORD OF KADCORIE'S DISCUSSION WITH SUN SUO-CHANG ON 25 MAY). KADOORIE WAS INVITED TO MEET THE VICE DIRECTOR OF THE KWANGTUNG ELECTRICAL INDUSTRY BUREAU IN CANTON ON JUNE 9 AND WAS ASKED (WITHOUT ANY COMMITMENT ON THE CHINESE SIDE) HOW MUCH POWER COULD BE MADE

AVAILABLE TO KWANGTUNG IN 1982/83. HE LEARNED THAT THE INSTALLED CAPACITY IN THE PROVINCE IS 2000 MW (IE LESS THAT CLP'S EXISTING INSTALLED CAPACITY) WITH ONLY 2 X 125 MW STATIONS PLANNED IN 1978 AND 1979. KADOORIE IS PERSONALLY EAGER TO SEE A LINK FROM

CLP'S PLANNED NEW 400 EHV SYSTEM TO THE KWANGTUNG GRID AT

SHEK LUNG WHICH IS ON THE EAST RIVER ABOUT 50 KILOMETRES NORTH OF THE HONG KONG BORDER. SUCH A LINK COULD, OF COURSE, PROVIDE AN OPENING FOR SALES OF BRITISH TRANSMISSION EQUIPMENT.

5. I SEE LITTLE POINT IN ESTABLISHING A COMPENSATORY TRADING

DEAL WITH THE CHINESE WHICH COVERS EQUIPMENT WHICH WE COULD EXPECT

TO SELL WITHOUT KESCO COAL PURCHASES. KADOORIE AGREES THAT WE SHOULD SEEK TO PRESENT BRITISH EQUIPMENT DIRECTLY RELATED TO KESCO

COAL PURCHASES EG EXTRA COAL MINING MACHINERY, SPECIALISED COAL TRUCKS, SPECIALISED COAL HANDLING PLANT AT THE CHINESE PORT (CH'IN-HUANG-TAO) AND POSSIBLE DREDGING EQUIPMENT TO PERMIT LOADING OF LARGE BULK CARRIERS. IF THE CHINESE ARE ATTRACTED BY KADOORIE'S OFFER TO OFFSET COAL PURCHASES BY THE SALE OF POWER TO KWANGTUNG, WE COULD ALSO INCLUDE TRANSMISSION EQUIPMENT AND CABLES AND PERHAPS HINT AT HELPING WITH THE ELECTRIFICATION OF THE CHINESE

SECTION OF THE KOWLOON-CANTON RAILWAY.