TNAG-0950-FCO40-1169-Effect-of-nuclear-exports-to-China-on-Hong-Kong-Guangdong-nu-1980 — Page 51

CONFIDENTIAL

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Financial Package

It

Nuclear power stations are excluded from the OECD Consensus but under the Sod Agreement reached in 1975, participants agreed not to grant more favourable terms than was then their normal practice. At that time the Americans considered 15 year: credit and a 90% loan as normal, while the C countries considered 10 years credit and a 85% loan as appropriate for industrialised countries and 12 years credit and a 90% loan as appropriate for developing countries such as China. is not known whether Westinghouse have made any financial offer; similarly the terms of the French offer are not known. ECGD are seeking details from COFACE.

In March 1979 the then Secretary of State for Industry indicated to the Chinese minister of foreign trade the willingness of the UK to support credit facilities for China up to an amount of US$5bn over a period up to 31 March 1985. The proposed credit for the Guangdong project could be comfortably accommodated within ra that figure.

In addition to any terms that might have been offered, the UK would wish to know what security was being provided and whether in particular a 100% Bank of China guarantee is considered necessary.

UK PWR Programme

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The UK has established a relationship with Westinghouse as respects its own PWR programme for trasfer of technology, the training o staff and the accumulation of experienced ad for both the UK and Chinese projects point in favour of a continuing Westinghouse relationship. If Framatone were to become involved the French would have to provide considerable project management, technical and opera- tional resources as part of the total UK team effort. Their readiness and ability to do this will weigh particularly with CLP.

Other considerations

The USA has shown its commitment to Hong Kong and is now the major outlet for Hong Kong trade. By contrast, France has liitle presence and little trade with the territory and thus in turn it this has less of a stake and less reason to ensure satisfactory progress on the project and desire to meet technical, reliability and safety criteria. France will therefore have to convince the UK and hence Hong Kong Government of its seriousness and commitment before it could be accepted as a totally trusted and reliable partner.

Summary

To safeguard the wider interest of the UK on the Guangdong nuclear project, the aim should be to secure:

project leadership;

the supply of the conventional island;

the supply of parts of the nuclear island other than the NS3;

the supply of fuel together with reprocessing arrangements.