TNAG-1059-FCO40-1309-Guangdong-nuclear-power-station-project-1981 — Page 75

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ACTION

NOTES OF MEETING TO DISCUSS GUANGDONG NUCLEAR PROJECT HELD AT ASHDOWN HOUSE

ON 12 OCTOBER 1981

Present:

Mr A G Manzie

Mr C Benjamin

Mr M Hawtin

Mr R Adams

Mr G Stevens

Mr A Paul

Mr A Friar

Chairman PEP

Treasury

Treasury

Energy

FED FCO

HKG FCO

Mr M Roberts

JNU FCO

Mr R Allen

Mr R Ranson

CRE

ECGD

Mr A J Havelock

Mr K B Newton

Mr N R Brice

See

48

Mr Manzie opened the meeting by saying that he wished to review the situation to date, to consider what papers might be presented to Ministers and also the forthcoming meetings with Lord Kadoorie.

Mr Havelock then gave a summary of recent activities on the project, drawing from the background paper previously circulated. Mr Havelock confirmed that the Westinghouse agreement with the Chinese only covered turbines up to 350MW. He added that there was no information available on the agreement with Japan on the peaceful uses of nuclear energy. JNU undertook to seek clarification.

Mr Havelock reiterated his concern over the activities of Bechtel, who had just given a presentation to the Chinese. It would seem that they are seeking to work with the Chinese and are recommending the course most favourable to their own organisation, namely to split the power station into the maximum number of small packages. If this is true, then it would be contrary to the UK's best interests, and also from the Chinese point of view might be unacceptable as it would leave them bearing liabilities in the event that the various packages did not integrate properly. It was agreed that Mr Manzie would tell Lord Kadoorie of Bechtel's activities, and he would also mention t

Dr Marshall. There was a need to bring the Embassy up to date on Bechtel and to ask them whether they could obtain any details of how the presentation had been received. Mr March should also be kept in touch. It was also reported that the next Ministerial activity would be a visit by the Minister for Trade, Mr Rees who would be visiting Peking, Guangdong and Canton 10-17 December; the Prime Minister would be having breakfast with the Chinese Prime Minister in Mexico in a couple of weeks time.

Mr Ranson had, at a previous meeting, undertaken to get in touch with GEC to ask for details of their estimated cash flows on the project to enable ECGD to calculate various rates of subsidy. Mr Ranson said that he had not asked GFC, but had instead made certain assumptions; he then tabled a letter from himself to Mr Hawtin giving a range of options. He continued that the consensus interest rates would probably be rising to around 10% for China on 16 November and although nuclear stations were still excluded from the terms of the consensus, they were caught by interest rates. Consequently, if an offer of 73% were to be made to the Chinese, a letter would have to go from ECGD to GEC before 16 November but this in turn would require Ministerial approval. Such an offer would preserve the interest rate at 73% provided that a contract was issued by the Chinese within 6 months of

JNU

Mr Manzie

Mr Newton

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