TNAG-1030-FCO40-1280-Proposed-visit-by-Humphrey-Atkins--Lord-Privy-Seal--to-Hong--1981 — Page 103

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GR 603

CONFIDENTIAL

FM PEKING 140157Z DEC 81

TO IMMEDIAT DOI

CONFIDENTIAL

TELEGRAM NUMBER INDUS 20 OF 14 DECEMBER

AND TO IMMEDIATE BTC HONG KONG

INFO IMMEDIATE HONG KONG, FCO (FED)

INFO PRIORITY PARIS

GUANGDONG NUCLEAR PROJECT

1. MR REES RAISED THIS SUBJECT DURING HIS CALL ON VICE PREMIER GU MU ON 12 DECEMBER, REPEATING OUR READINESS TO SEND A HIGH RANKING OFFICIAL DELEGATION TO PEKING TO DISCUSS THE MATTER FURTHER AS SOON AS THE CHINESE CONSIDERED THE TIME WAS RIPE.

2. IN REPLY GU MU SAID THAT CHINA HAD ALREADY AGREED WITH FRANCE IN PRINCIPLE FOR THE CONSTRUCTION OF A NUCLEAR POWER STATION IN GUANGDONG TAKING THE FORM OF A PWR POWERING TWO 900 MW GENERATING SETS. IT HAD BEEN MADE CLEAR TO THE FRENCH THAT THEY SHOULD SUPPLY THE NUCLEAR ISLAND AND THAT THE CHINESE WOULD LIKE EQUIP- MENT FOR THE CONVENTIONAL ISLAND TO BE SUPPLIED BY THE UK, PROVIDED THAT THE TERMS WERE RIGHT. THE FRENCH HAD AGREED TO THIS ARRANGEMENT.

3. GU SAID THAT THE CHINESE HAD ORIGINALLY PLANNED TO START DI SCUSSIONS WITH UK FIRMS BY NOW FOR THE SUPPLY OF THE RELEVANT EQUIPMENT. BUT CHINESE EXPERTS WERE STILL EXAMINING THE FEASI- BILITY STUDY FOR THIS PROJECT AND HAD NOT YET REACHED AGREEMENT WHETHER GUANGDONG'S REQUIREMENTS WOULD BEST BE MET BY HEP OR BY

A NUCLEAR POWER STATION. AS THIS WAS SUCH A BIG PROJECT IT WAS NECESSARY TO MOVE CUATIOUSLY, PARTICULARLY WHERE THERE WAS A DIFFERENCE OF OPINION AMONG THE EXPERTS. A DECISION WHETHER OR

NOT TO PROCEED WOULD THEREFORE HAVE TO BE POSTPONED FOR A LITTLE -

WHILE TO ENABLE THE EXPERTS TO DISCUSS THE QUESTION EXHAUSTIVELY.

4. GU EXPLAINED THAT ONE FACTION AMONG THE EXPERTS MAINTAINED

THAT CONDITIONS IN GUANGDONG WERE MORE FAVOURABLE FOR HEP BUT THE

FAULT IN THIS ARGUMENT WAS THAT HEP WOULD NOT BE CAPABLE OF

SATISFYING GUANGDONG'S FULL REQUIREMENTS LET ALONE GENERATING SURPLUS POWER FOR SALE TO HONG KONG. DURING THE DRY SEASON THE

AMOUNT OF POWER GENERATED MIGHT BE REDUCED BY AS MUCH AS 50% WHICH WOULD POSE SERIOUS PROBLEMS FOR INDUSTRY IN THE PROVINCE. IF THE EXPERTS WHO CLAIMED THAT HEP COULD NOT PROVIDE SUFFICIENT

POWER AND THAT THIS WOULD AFFECT THE ABILITY TO SELL POWER TO

HONG KONG WERE RIGHT THIS WOULD PROVE A CRUCIAL FACTOR. IN ANY

CASE A DECISION SHOULD NOT BE LONG DELAYED AND THE BRITISH AND

-FRENCH WOULD BE NOTIFIED IMMEDIATELY IT WAS REACHED.

CONFIDENTIAL

/COMMENR

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