TNAG-0949-FCO40-1168-Effect-of-nuclear-exports-to-China-on-Hong-Kong-Guangdong-nu-1980 — Page 166

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KEC/CLP Joint Venture as Originally Contemplated

7.

8.

It is clear to me that CLP, as a public utility company operating under a "Scheme of Control", cannot participate directly in providing equity finance for the construction of a nuclear power station, and that consequently, the normal rules, as they have so far been adapted to commercial joint ventures between foreign and Chinese interests, cannot be applied. The financial responsibilities and the risks involved far exceed public company capabilities and are such that they can only be carried by a government.

This, however, does not mean that CLP, through a separate Hong Kong Registered Project Management Company cannot work closely and harmoniously with the KEC towards accomplishing a project which they both believe to be to their mutual interest.

(b)

Total Ownership of N.P.S. by KEC/PRC

9.

Hissed

intent to ac Ander

The special features which take a nuclear power station out of the scope of an investor-owned public company and. into the realm of Government are :

(a) The enormous cost estimated in this instance

(b)

(c)

(a)

(e)

at US$4 Billion.

In the case of a nuclear power station, only limited insurance cover can be obtained. No commercial company can cover the risk which must eventually be assumed by Government.

The risk of low availability, i.e. not obtaining sufficient plant output to finance the loans associated with the project.

The difference between the laws appertaining to a Hong Kong Registered Company and a Company registered in PRC, and the effect of this difference when endeavouring to raise International loan finance. This indicates that the necessary finance should be obtained by the Bank of China from the International Monetary Fund or the World Bank.

Note: As yet the PRC has not promulgated the

Company Law which will apply, though it is expected this may be published shortly.

The need to negotiate for the purchase of Uranium, fuel fabrication activities, processing, and eventual storage and disposal of waste.