CONFIDENTIAL
Any
21 CLP do not propose to inject equity into the project.
equity contribution that CLP were required to make in relation to Guangdong and any prior commitment they might be required to make to take power from the Guangdong station could have very serious implications for ECGD's exposure on the CLP group. In particular, it would be necessary to ensure that the commitment to take power was subordinated to the optimum use of CLP groups own generating capacity.
22
Officials recommend:
that the Chinese be offered an 85% loan over 12
years as provided under the Standstill Agreement that a repayment period of 15 years, _capitalisation of pre-commissioning interest and support for local costs
only be considered if it becomes evident that one or all
of the elements would be a vital factor in winning the contract.
Liabilities
23 Liabilities in respect of the commercial construction and operation of nuclear power stations are various and Annex B
contains a detailed discussion of them. The one most likely to affect Governments is that relating to third party liability in
the event of an emission of radioactive material.
24
There is no compelling logical or legal reason why HMG should assume any third party liability in respect of the Guangdong project beyond those which it already has under inter- national convention and which arise solely from the provision of fuel. The international practice is for absolute liability to rest with the operator with the relevant Government bearing liability in excess of agreed limits up to a fixed limit. It can be argued that PRC should therefore assume liability. To the extent that HMG might put up risk capital, it would thereby accept some liability, but this would be limited to the value of its investment. However, the Guangdong project is essentially a joint venture, and the PRC is likely to insist on shared liability as part of the price for preferring supplies from the UK.
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CONFIDENTIAL
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