TNAG-1497-FCO40-2055-Guangdong-nuclear-power-station-project-at-Daya-Bay-safety-c-1986 — Page 334

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CONFIDENTIAL

(A) THAT THE AGREEMENT TO CONSIDER DEFERRAL SHOULD APPLY IF THE GEC EQUIPMENT DID NOT PERFROM TO SEPCIFICATION, AND

(B) THAT HMG SHOULD BEAR THE INTEREST COST OF ANY DEFERRAL.

6. WE RESISTED BOTH THESE POINTS, ON THE FIRST USING THE USUAL ARGUMENT THAT HMG COULD NOT TAKE RESPONSIBILITY FOR GEC'S EQUIP- MENT, AND ON THE SECOND THAT WE COULD NOT COMMIT HMG TO ADDITIONAL EXPENSE SEMICOLON AT THE TIME ANY PROBLEM AROSE THE ARRAGEMENTS FOR HANDLING INTEREST DEFERRAL WOULD HAVE TO BE DISCUSSED

PETWEEN THE PARTIES. EVENTUALLY BOC APPEARED WILLING TO ACCEPT THE PROPOSED LETTER, SUBJECT TO REMOVAL OF THE WORDS QUOTE

OR OF THE PRC UNQUOTE AT ITS END. HOWEVER, THEY ALSO APPEARED TO REGARD THIE CONCESSION ON THEIR PART AS A QUID PRO QUO FOR

FURTHER MOVEMENT BY US ON PREMIUM.

7. LOCAL COSTS: WE WERE PRESSED TO REGARD A NUMBER OF ITEMS OUTSIDE GEC'S RESPONSIBILITY (ACCOMODATION, MARINE INSURANCE) AS ELIGIBLE FOR LOCAL COVER. WE AGREED TO CONSIDER THIS IF WAYS COULD BE FOUND FORMALLY OF RUTTING THEM THROUGH THE GEC CONTRACT. ON CIVIL WORKS, WE WERE PRESSED TO AGREE THAT LOCAL COSTS WOULD ELIGIBLE WITHOUT THE CONTRACTUAL INVOLVEMENT OF A BRITISH COMPANY. WE RESISTED THIS, WHILST AGREEING THAT HONG KONG SUBSIDIARIES OF UK COMPANIES COULD

COUNT IF UK PARENT HAD CONTRACTUAL RESPONISBILITY AND

SUBSIDIARY CARRIED OUT WORK.

SOME. TECHNICAL POINTS REMAIN TO BE SETTLE BUT AGREEMENT IN PRINCIPLE APPEARS TO HAVE BEEN REACHED.

8. GENERALLY BOC AND JVC WERE IN A POSITIVE AND RELATIVELY HELPFUL MOOD. INITIALLY THEY SUGGESTED THAT NEGOTIATING MEETINGS WOULD BE FINISHED SATURDAY TO ALLOW THE DRAFT MOU TO BE DRAWN UP ON SUNDAY AND SIGNED ON MONDAY. IN THE ABSENCE OF AGREEMENT ON PREMIUM, A MEETING IS PLANNED FOR 1100 LOCAL TIME TO DISCUSS ELEMENTS OF A DRAFT MOU IN THOSE AREAS WHERE AGREEMENT HAS BEEN REACHED, SHOULD THERE BE NO FURTHER NEWS TO REPORT ON PREMIUM.

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