3
Political Benefits
The lease on the New Territories is due to expire in 1997. The development of projects which strethen economic interdependence between Guangdong and Hong Kong should tend to contribute to Hong Kong's stability and the maintenance of business confidence in the territory. Although it is unlikely that it will in itself provide a solution to the question of the future of Hong Kong, a major project such as a nuclear power station could well play an important role in maintaining Hong Kong's status.
Equally Sir Lawrence Kadoorie has received encouragement of which the Chinese will be aware) on the project at a high political level in the UK, and HIIG have provided very strong official support to the CLP team. To back away now would be interpreted as a deliberate act of disinterest which could damage the credibility of the UK and Hong Kong Governments as well as that of Sir Lawrence Kadoorie. If the latter happend the UK would have no hope of securing a negotiated contract for the 4 x 660 17 Castle Peak B Station, decisions on which are expected early next year.
Costs and Risks
A project of this size has inevitable risks. The UK Government should seek to lay these off on to other parties and to minimise its exposure wherever possible. To achieve this decisions will be necessary on various issues.
Nuclear Partner
The Governor of Hong Kong has to be able to say that the package offered is credible in terms of the hardware being of a technical and safety standard sufficient both to perform effectively and meet general UK safety standards. The key to this will be the nuclear island. There are 3 potential suppliers KWU, Framatome 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. Framatome are however more likely to be disposed to assume responsibility for the whole nuclear island. lock them into a partnership with GEC would forestall any pre-emptive bid by the French who were earlier negotiating to sell just a such a PWR to China would be "communaitaire" and could lead to
partnerships elsewhere such as Korea.
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