TNAG-0949-FCO40-1168-Effect-of-nuclear-exports-to-China-on-Hong-Kong-Guangdong-nu-1980 — Page 32

HOFO @16/29

PP DO I

GRS 550

CONFIDENTIAL

FM B T C HONG KONG 290800Z JUL 80

TO PRIORITY DOI

Mr Mate million Ms Myche..

TELEGRAM NUMBER INDUS 148 OF 29 JULY

YOUR INDUS 208

HKK 666

NO ESTRIBUTION

78K 129

брий Нинад Er S+ Sd

CASTLE PEAK B STATION.

TRED (kx)

20181)

AS YOU MAY IMAGINE STONES WAS PREOCCUPIED LAST WEEK WITH THE' KEC/CLP DISCUSSIONS AND PREPARATIONS FOR KADOORIE'S VISIT TO LONDON. AFTER SPEAKING TO ALAN BROWN (GEC) AND ERIC GRAY (BABCOCK) ON SATURDAY, I SAW STONES TODAY FOR A REVIEW OF PROGRESS ON THE 'B'

STATION.

2. HAVELOCK'S VISIT CAN PROCEED AS PLANNED. IT IS THE COLLECTION OF DATA FOR THE FEASIBILITY STUDY RATHER THAN THE FINAL DRAFTING WHICH WAS COMPLETED AT THE WEEKEND. CLP SEEM PLEASED WITH BOTH THE PRICE ADJUSTMENTS AND THE ARGUMENTS AGAINST INEXPERIENCED SUPPLIERS RENDERED BY GEC- LIPPITT BROWN HAVE PROMISED ME GUIDANCE ON THE LATTER WHICH I SHALL FIND THIS INVALUABLE IN INFORMAL EXCHANGES WITH THE HONG KONG GOVERNMENT. TARGET DATE FOR COMPLETION OF THE STUDY IS MID AUGUSTI E BEFORE BROOKS GOES ON LEAVE. HAVELOCK WILL THEREFORE HAVE AN OPPORTUNITY TO CONTRIBUTE TO THE CONCLUSIONS OF THE REPORT ESPECIALLY WITH REGARD TO CONTRACT STRATEGY. YOU WILL BE ENCOURAGED TO LEARN THAT STONES NOW BELIEVES HE CAN RECOMMEND AGAINST MITSUBISHI ( ON GROUNDS OF INEXPERIENCE WITH 660 MW TURBINES ) ALTHOUGH BROWN BOVERI REMAIN FORMIDABLE COMPETITORS. AS YOU KNOW KENNEDY AND DONKIN ARE BEING USED TO VET THE REPORT IN DRAFT (MY INDUS 63 OF 2 APRIL).

3. 1 DOUBT WHETHER THE SUGGESTION IN YOUR PARAS 2 AND 3 IS A STARTER

STONES TELLS ME THAT THE PROJECT DESIGN MEMORANDUM IN THE CLP STUDY IS BASED ON THE FUNCTIONAL SPECIFICATIONS FOR DRAX ALREADY PROVIDED BY THE CEGB ( YOUR INDUS 78 OF 13 MARCH). HE CONSIDERS THAT THE FUNCTIONAL SPECIFICATIONS FOR THE B STATION CAN BE WRITTEN BY CLP AS WAS DONE FOR THE A STATION, WHEN GEC PUT FORWARD A DESIGN RESPONSE WHICH WAS VETTED BY GECB ACTING ON BEHALF OF CLP AS PART OF OUR PACKAGE. STONES RECOGNISES THAT YOU MIGHT WISH TO PROCEED DIFFERENTLY BY PROVIDING A CEGB SPECIFICATION AGAINST WHICH GEC AND/OR NEI MIGHT TENDER BUT HE REMAINS SO DISENCHANTED WITH CEGB'S SENIOR MANAGEMENT LACK OF COMMITMENT TO THESE PROJECTS THAT HE WOULD PREFER NOT TO USE THEM IN THIS ROLE. I HAVE NOT THEREFORE MENTIONED THE DIFFICULTY IN YOUR PARA 4.

4. THERE IS ONE DATA COLLECTION POINT ON WHICH I NEED THE DEPARTMENT'S HELP. GEC HAVE GIVEN A THIRD PARTY ESTIMATE OF THE PREMIUM CHARGES LIKELY TO BE RAISED BY ECGD. STONES AND BROOKS ARE ANXOUS TO FEED AS LOW A FIGURE AS POSSIBLE INTO THEIR COMPUTER MODEL OF COMPARATIVE COSTS. I RECOGNISE THAT ECGD WILL NOT WANT TO GIVE ANY COMMITMENT BUT GIVEN THE RATHER SPECIAL

MATURE OF THIS EXERCISE CAN YOU OBTAIN FOR ME, AS SOON AS POSSIBLE, A BALL PARK FIGURE BETWEEN THE 1.58 PER CENT AND THE 4.41 PER CENT QUOTED BY TAYLOR TO THE PARLIAMENTARY SELECT COMMITTEE ON TRADE AND INDUSTRY ON FEBRUARY 20 1980 ( SEE PAGES 41 AND 42 OF MINUTES OF EVIDENCE) FOR COST ESCALATION AND SOME KIND OF ESTIMATE FOR THE LOAN GUARANTEE PREMIUM. IS CHARLES BIRCH STILL IN CHARGE OF CLP AFFAIRS AT ECGD?

MARCH

NNNN

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