TNAG-1059-FCO40-1309-Guangdong-nuclear-power-station-project-1981 — Page 2

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Feasibility studies directed by an Executive Committee comprising senior representatives of CLP and GPC, to determine whether a joint venture nuclear power project would be feasible and commercially viable, have now been completed. The purpose of this memorandum is to summarise the conclusions of the report in respect of economic aspects and to seek Members' advice on whether the implications of the report indicate that the Hong Kong Government should continue to support the project.

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Work is still in hand on the safety and environmental issues. Members' advice will be sought on them in a separate memorandum if Members advise that the project should be supported on economic grounds,

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By way of background the attitude of China to the project is evolving as generally favourable, although there continues to be considerable uncertainty about which source of supply to use for the equipment. The most authoritative recent statement by a Chinese leader was made by the Prime Minister during his discussions with the British Foreign and Commonwealth Secretary at the beginning of April. Mr Zhao said that the nuclear project proposed by the Guangdong authorities had the support of the central govern- ment although technical problems still had to be solved. He hoped that Britain would take part in the competition for contracts. He understood the point that the project would be more acceptable to Hong Kong if it contained a substantial British element and added that the British and Chinese sides should keep in touch, particularly when it came to a choice of equipment.

The CLP/GPC Feasibility Report

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The feasibility report referred to in paragraph 2 above is summarised in the following paragraphs:-

(a)

(b)

main conclusions and recommendations (paragraph 6);

ownership, operation and financing (paragraphs 7 to 10);

(c) timing (paragraph 11);

(d) cost compared with coal-fired station (paragraphs 12 to 16);

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(e)

share of electricity to be available for Hong Kong (paragraph 17).

The proposals in the report are then assessed under the following headings:

(f)

projected energy requirements for Hong Kong (paragraphs 18 and 19);

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