TNAG-0950-FCO40-1169-Effect-of-nuclear-exports-to-China-on-Hong-Kong-Guangdong-nu-1980 — Page 118

GR 505

CONFIDENTIAL

FM FCO 151823Z SEP 80

TO IMMEDIATE HONG KONG

CONFIDENTIAL

TELEGRAM NUMBER 783 OF 15 SEPTEMBER

116 OUR TELNO 770

TOP COPY

HICK 166/1

RECEIVED IN REGISTRY NO. 51 19 SEP 1980

DESK OFFICER

INDEX

ملا

PA

RECISTRY

T

$4.9 Awala

1 THOUGH MUCH SHORTER, DOI DRAFT STILL TOO LONG TO TELEGRAPH IN FULL. ESSENTIAL DIFFERENCES FROM VERSION SENT BY MORRICE ON 5 110 SEPTEMBER AS FOLLOWS.

2. NEW SECTION ON POLITICAL BENEFITS (FORMER PARAS 8..AND 9) READS: WITH THE NEW TERRITORIES LEASE DUE TO EXPIRE IN 1997, THE INCREASED ECONOMIC INTERDEPENDENCE BETWEEN GUANGDONG AND HONG KONG WOULD CONTRIBUTE TO HONG KONG'S STABILITY AND BUSINESS CONFIDENCE AND HELP TO REASSURE INVESTORS ABOUT THE TERRITORY'S FUTURE STATUS. WITH HMG'S SUPPORT OF THE CLP STUDY KNOWN TO THE CHINESE, TO ATTEMPT TO DISENGAGE NOW WOULD ONLY BE ADVERSELY INTERPRETED AND SO WEAKEN THE CREDIBILITY OF THE UK AND HK GOVERNMENTS, AND THE QUOTE FACE UNQUOTE OF SLK. APART FROM THE NUCLEAR PROSPECT, SLK'S GOOD WILL IS CRITICAL TO SECURE A NEGOTIATED CONTRACT FOR THE 4 X 660 MW CASTLE PEAK B STATION, DECISIONS ON WHICH ARE EXPECTED EARLY NEXT YEAR.

3. SECTION ON EQUITY (FORMER PARAS 11 TO 14) NOW READS: WE HAVE

BEEN TOLD BY CLP THAT THE GUANGDONG AUTHORITIES MAY SEEK DIRECT HMG AND HKG EQUITY INVOLVEMENT, PROBABLY BECAUSE IT WOULD ENSURE POLITICAL AND MORAL COMMITMENT.

4 NEW SECTION ON LIABILITIES (FORMER PARAS 23 TO 27) READS: MOST OF THE RISKS ASSOCIATED WITH THE GUANGDONG PROJECT CAN BE COVERED BY COMMERCIAL INSURANCE HMG MAY HAVE TO ACCEPT SOME FINANCIAL RESPONSIBILITY IN THE EVENT OF A MAJOR NUCLEAR ACCIDENT: THE GUANGDONG PROJECT IS ESSENTIALLY A JOINT VENTURE AND THE PRC MIGHT INSIST ON SHARED LIABILITY AS PART OF THE PRICE FOR PREFERRING EQUIPMENT AND OTHER SUPPLIES FROM THE UK. IF THIS PRICE HAS TO BE PAID WE SHOULD NEGOTIATE AN AGREEMENT WITH THE PRC WHEREBY (A) HMG WOULD MEET THE COST OF TECHNICAL DIRECTION OF THE CLEANING

UP OPERATION (THIS WOULD IN ANY EVENT PROVIDE THE UK WITH VALUABLE EXPERIENCE):

- (B) THE COMPANY OPERATING THE STATION SHOULD HAVE STRICT LIABILITY

IN RESPECT OF THIRD PARTY DAMAGE UP TO AN AGREED LIMIT: (C) THE PRC GOVERNMENT SHOULD ACCEPT ALL RESIDUAL LIABILITY FOR

DAMAGE WITHIN THE PRC RESPONSIBILITY FOR HONG KONG SHOULD REST WITH THE HONG KONG/UK GOVERNMENTS. (THE LATTER WOULD REQUIRE LEGISLATION.)

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