TNAG-1501-FCO40-2059-Guangdong-nuclear-power-station-project-at-Daya-Bay-safety-c-1986 — Page 110

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1986

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1 REGISTRY

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Note for File

(Gangdong Nuclear)

Note of Meeting at DM 11:30 am 1 August 1986-

1.

Those present included Benjamin (Chair) and Alty (DM) wilson, Hum, Gordon, Raven, Leeks (FCO) Morphet (D/En).

+ Welman

2. Re Contract Signature Benjamin made clear that there were still sufficient hurdles to overcome re financing to enable the process to be slowed if necessary. JVC were facing several difficult Chinese questions on financing before contracts could be signed. Alty explained that the key date for signature was 7 October, which was the target for ATP (i.e "contract effectivefss"): failure to meet this target might mean:

(a) 17 October GEC letter of intent expires - extension might be costly.

(b) 1 November fixed prices cease to apply. Benjamin pointed out that either the Chinese might seek to exploit obvious delay on our part in the negotiations which were still in progress; or other parties might claim compensation from HMG. Also, French were conscious of Japanese threat in the wings. DTI thought Framstone's key dates were the same as GEC's. The main opportunity for delay lay in BOC's current negotiations with UK and French governments on financial arrangements: until these were complete China could not approve contract documents (aiming to approve by 15 September).

3.

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Considering risks of delay, Benjamin asked if it might not be better to move contract signature ahead quickly, in case UMELCO's report was unfavourable. Wilson said that such action would certainly produce a very difficult situation in Hong Kong; whereas the risks of not pre-empting UMELCO, even if their report proved critical, were less certain. Morphet asked what the report might be likely to say. Hum felt that on balance the UMELCO programme was slightly pro-nuclear (France, IAEA) with plenty of sound advice available. Wilson added that

as a guess only the report might be fairly level-headed, concentrating on safety aspects and unlikely to be strongly opposed to the project. There were two preessures working on UMELCO: a wish not to row with China plus a recognition of the need for nuclear/electrical power and the commitment of HKG to the project, vs. very strong political/public opinion pressures in HK. Morphet suggested the French would be making a similar assessment. Benjamin felt the French were being a little complacent about the HK problem, and he would use his meeting with DREE On 6 August (which HKD would attend) to keep them up to the mark.

4.

Benjamin suggested HKG (via Cater?) were in the best position to find out JVC's position in their current contract negotiations with the Chinese. Members generally agreed that since the timing

CONFIDENTIAL