TNAG-0941-FCO40-1160-Visit-by-Lord-Carrington--Secretary-of-State-for-Foreign-and-1980 — Page 87

To go behind Brip No 13

PAPER FOR MINISTERS ON THE GUANGDONG NUCLEAR POWER PROJECT

INTRODUCTION

The Secretary of State for Industry informed colleagues on 25 October 1979 and 18 February 1960 about prospects for UK involvement in a nuclear power station to be built as a joint venture between China Light and Power Limited (CLP) and the Guangdong Electricity Company (C); about half of the output is to be sold to CLP to finance the venture. Ministers agreed then that:

a continuing UK industrial and official involvement in the project was justified;

technical support should be provided to CLP for the feasibility study;

the UK would not insist on nuclear inspection safeguards but would seek general assurances on the peaceful application of nuclear technology and fuel.

As Sir Lawrence Kadoorie reported to the Prime Minister, Secretary of State for Industry and the Lord Privy Seal during his recent visit, prospects of a favourable outcome on the project have improved. The Governor of Hong Kong also believes this. There have however been no direct contact between MIG officials and those responsible for the project in Guangdong and no fira evidence that the central leadership in Peking approve of the project.

Ivo Good opportunities to probe Chinese intentions now exist: a middle ranking member of the Guangdong Provincial Government who has been closely involved in the project is to visit the UK from 18 September; and the Foreign Secretary will be able to sound out Chinese leaders in Peking.

COMMERCIAL ISSUES

It is likely

The feasibility study should be completed at the end of October. to conclude in favour of 2 x 900 MW PWR with associated pump storage and transmission schemes (valued at US $4000M) with the UK as preferred supplier of the non-nuclear hardware (valued at about US $13001). As such the project would be the largest Sino British venture at least since the Revolution. Additionally contracts for the transmission network (US $500M) and fuel services from BNFL are possible, while the prestige project could open up wider trade possibilities in South China and the area generally with enormous potential benefits to UK industry.

Our aim is for GEC to obtain a major contract but they need a nuclear partner. GEC would want this partner to assume contractual responsibility for the whole nuclear island. There are three contenders: KWU (Germany), Framatone and Westinghouse; KWU is acceptable technically, but its commercial practice has been to offer turnkey contracts, which could well be unacceptable to the Chinese. Framatome designs would require technical changes to bring them more into line with expected future requirements on safety, but they are more likely to be disposed to assume responsibility for the whole nuclear island. To lock them into a partnership with GFC would forestall a pre-emptive bid by the French who were earlier negotiating to sell such a FWR to China

would

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