TNAG-0948-FCO40-1167-Effect-of-nuclear-exports-to-China-on-Hong-Kong-Guangdong-nu-1980 — Page 174

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442 New Company (NEDAB)

¿Sir. Lawrence's proposal for forming a new company (tentatively called

NEDAB) was given on. pages 12 and 14 in the Agenda.

The formation of a new company to construct, manage and operate the nuclear power station was discussed. KEC stated that :

(i) KEC agreed to the proposed method of development where KEC

and CLP would jointly be responsible for investment and management of the nuclear power station. KEC was also agreeable to the possibility of including other parties (e.g. Hongkong Electric Co., Ltd.) in the joint development.

(ii)

KEC agreed to contribute 50% or more towards the equity of the new company. All parties investing in the joint development should participate in the management of the new company (the number of directors in the Board representing the various parties to be commensurate with shareholdings). The Chairman of the Board should be appointed by KEC and the Deputy Chairman by CLP (or other parties). All parties would contribute staff and expertise towards management of the power station.

(iii) Profits should be shared among the various parties in accordance

with shareholdings.

(iv)

(v)

Business risks should be shared among the various parties in accordance with shareholdings.

Details of the joint development should be in accordance with the published Law of the PRC on Joint Ventures using Chinese & Foreign Investment.

Involvement by the PRC Central Government in the new company was dis- cussed. KEC advised that the joint development would be between KEC and CLP. Whilst approval from the PRC Central Government would be required, direct involvement by the PRC Central Government was not necessary.

The price of electricity supplied by the nuclear power station to KEC, CLP and other parties was discussed. KEC suggested that the following factors should be considered in determining the prices :

(i) Different prices for different markets;

(ii)

Prices prevailing at the time of commissioning the nuclear power station;

(iii) Profits to be generated by the Company.

KEC advised that if 2x1000 MW sets were constructed, KEC would be able to consume one-third to one-half of the total power capacity (i.e. 670 to 1000 MW).

It was agreed that a new company would be formed if the joint develop- ment was found. to be viable by the Working Committee.

The new company would plan, construct, manage and operate the nuclear power station.