GUANGDONG NUCLEAR PROJECT
ESSENTIAL FACTS
CONFIDENTIAL
1. Mr Luce is familiar with this £4bn project to construct power station in Guangdong Province as joint venture between Chinese and
Hong Kong interests. In joint Anglo/French approach Framatome are
bidding to supply nuclear island and GEC to supply conventional
island (value approximately £500m). In addition, at invitation of
China Light and Power (CLP-Hong Kong's main electricity company), UK Department of Trade and Industry (DTI) has now presented
proposals for transmission line from Guangdong to Hong Kong. This
offers prospect of up to £300m business for Balfour Beatty.
Agreement with Chinese
2. In Peking in December 1983, DTI signed Agreement on project with Chinese Ministry of Water Resources and Electric Power.
Agreement set framework for negotiations to proceed between Hong
Kong Nuclear Investment Company (HKNIC) and Guangdong Nuclear Investment Company (GNIC) on establishemnt of joint venture company
and arrangements for purchase of electricity by Hong Kong; and
further strengthened GEC's position as potential supplier of
conventional island. DTI resisted Chinese pressure for concessions
on export credits; discussions on financing were deferred until GEC
enter their bid. Both Hong Kong Government and CLP were well satisfied with Agreement. In principle Agreement should be formally countersigned by Ministers. However, it records an interim stage in
negotiations, and Sir Percy Cradock has advised that we should not
take forward formal signature, unless Chinese press the point.
Commercial Aspects
3. Next steps are primarily for commercial interests in project.
Negotiations will now be held between HKNIC and GNIC on joint venture and electricity purchase agreement. Framatome are due to
enter bid for nuclear island in mid-February and GEC for
conventional island in mid-March.
Chinese hope to complete contract
CONFIDENTIAL
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