TNAG-0950-FCO40-1169-Effect-of-nuclear-exports-to-China-on-Hong-Kong-Guangdong-nu-1980 — Page 35

TH SAME AS THE INFLATION ASSUMPTION.

THE COMPARISON WITH THE COAL FIRED OPTION IS INTERESTING AND THE FINANCING ASSUMPTIONS ILLUMINATING, NO DOUBT THEY ARE MEANT FOR

BENTATIONAL PURPOSES RATHER THAN THE TERMS CLP ARE EXPECTING FOR THE CASTLE PEAK B STATION. CERTAINLY IN THE LATTER CASE THE SHAREHOLDERS FUNDS WILL BE FAR IN EXCESS OF 15 PER CENT (AT LEAST 33 PER CENT). A COMMERCIAL LOAN WHICH IS DOUBLE WHAT THE UK HAS BEEN ASKED TO PROVIDE IS ALSO ASSUMED TOGETHER WITH CAPITALISATION OF

INTEREST DURING THE CONSTRUCTION PERIOD.

IN THE FOREIGN CASH FLOW ANALYSIS IT IS PROPOSED THAT A BACK-TO- BACK RMB LOAN WILL BE PROVIDED FROM SURPLUS FOREIGN EXCHANGE TO

MEET RMB EXPENDITURE. CARE SHOULD BE TAKEN TO ENSURE THAT THE FOREIGN

EXCHANGE IS NOT LOST. I AM ALSO A LITTLE SURPRISED THAT THE

REGISTERED CAPITAL OF THE GNPC WILL BE IN US DOLLARS RATHER

THAN RMB SINCE IT WILL BE A PRC COMPANY. I ALSO WONDER WHETHER

IN THE POWER SHARING AGREEMENT CHAPTER 3.2 IT WOULD NOT BE ADVIS-

ABLE FOR ALL FOREIGN CURRENCY TO BE IN US DALLARS IF ALL THE LOANS ARE IN US DOLLARS. THE FLEXIBILITY PROPOSED COULD BE DANGEROUS. I SEE THAT THE TRANSMISSION LINES WILL COST DOLLARS 500 M AT CURENT PRICES AND SINCE THIS COST IS CLEARLY AN INTERGRAL PART OF THE

NUCLEAR POWER STATION I WONDER WHY THE EXPENDITURE HAS NOT BEEN INCLUDED IN THE CASH FLOWS FOR THE PROJECT AND ON A COMPARABLE

BASIS AS THE POWER STATION.

I HAVE A COUPLE OF POINTS ON THE DRAFT CONTRACT FOR JOINT DEVELOPMENT OF GNPC. ALTHOUGH IT IS NO DOUBT DELIBERATE, SECTION 15 MAKES NO REFERENCE TO THE RESPONSIBILITY OF KEC TO OBTAIN PRC, PROVINCIAL GOVERNMENT AND BANK OF CHINA APPROVALS AND GUARANTEES: I SUPPOSE THE SAME MIGHT BE SAID FOR CLP. SECTION 17 SUGGESTS THAT OUTSIDE SHAREHOLDERS WOULD HAVE VIRTUALLY NO CONTROLE OVER EVENTS SINCE A TWO THIRDS MAJORITY WOULD ONLY REQUIRE ONE OUTSIDE DIRECTOR TO AGREE, IT MAY THUS BE THAT A THREE QUARTER MAJORITY WOULD BE PREFER- ABLE. I NOTE FROM SECTION 24 THAT THE FIVE YEAR ALTERNATING PERIOD

FOR GENERAL MANAGERS AND CHIEF ENGINEERS OPERATES DURING THE

CONSTRUCTION PERIOD. I WONDER IF THIS IS WISE AND WHETHER THE 5 YEAR PERIOD SHOULD NOT COMMENCE WITH THE OPERATION OF THE PLANT,

SECTION 34 ON LOSS AND DAMAGE ALMOST SEEMS TO IMPLY A COMPLETION GUARANTEE WHICH WOULD BE HELPFUL. HOWEVER AS NOTED ABOVE, THERE

ARE WIDER ISSUES OF LIABILITY WHICH WILL NEED TO BE CONSIDERED.

A GENERAL POINT ON THAT DRAFT AGREEMENT IS THAT OF COURSE IT

OMITS ANY REFERENCE AS TO THE PRICE MECHANISM. THIS IS LIKELY

TO BE A MATTER OF SOME INTEREST TO US ESPECIALLY IN CONNECTION

WITH THE B STATION.

}

ON PAGE 46 OF PART IV SYSTEM DESIGN SUB COMMITTEE REPORT THERE IS

A PAGE OF STATISTICS COVERING BOTH KEC AND CLP UNITS, I ASKED

GEC FOR ADVICE AND WE CANNOT UNDERSTAND THE FUGURES FOR INERTIA