TNAG-1507-FCO40-2065-Guangdong-nuclear-power-station-project-at-Daya-Bay-safety-c-1986 — Page 112

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HONG KONG LEGISLATIVE COUNCIL 16 July 1986

Mr. S. L. CHEN and others have commented upon management. The arrangements to which I have referred provide that the managers of the project and the operations departments shall initially be recommended by Hong Kong Nuclear Investment Co., that is to say, the Hong Kong partner. Following the fifth anniversary of the commissioning of the second generating unit, the managers of the project and operations departments shall be recommended by the Guangdong Nuclear Investment Co., that is to say, the Chinese partner, but the deputies to be appointed after the fifth anniversary shall still be recom- mended by the Hong Kong partner. In making their recommendations both parties are required to choose persons whose ability and experience are suited to the requirements of the relevant job, and that requirement persists for the life of the joint venture.

Sir, I have referred to the question of cost to the consumer, in other words the tariff. To ensure that the project would benefit consumers, we decided at an early stage that it would be wise to have a full and independent evaluation of the financial aspects of the project by merchant bankers. Accordingly in March. 1983, as Members may recollect, the Government engaged consultants to look into the financial implications of the project. Furthermore, in August of the same year, we invited a firm of technical consultants to study the possible impact of the proposed in-take of electricity from Daya Bay on the stability of Hong Kong's power system. In the light of the advice received we concluded that the purchase of electricity from the project would provide significant savings and furthermore that on technical grounds the stability and reliability of Hong Kong's own system would not be adversely affected.

So with the benefit of entirely independent advice and after consulting the Executive Council, we informed China Light & Power of the Government's willingness, in principle, to endorse an offtake agreement. China Light & Power then formed the Hong Kong Nuclear Investment Co. Ltd.

In the course of our consideration of the project much attention was paid to the arrangements for the establishment and financing of the Hong Kong partner in the joint venture company, that is to say the Hong Kong Nuclear Investment Co. Ltd. The financing of this company was the subject of thorough and prolonged deliberations. The company was eventually formed with a paid up capital of $300 million with additional capital provided by way of a loan. guaranteed by the Government. But this route was followed, that is to say, a loan backed by a Government guarantee, because it was found to be a relatively cheap and effective way of providing the company with suflicient funds to pay its contributions to the joint venture company itself. I mention this matter specificially because it has been the subject of comment in the press and indeed in this debate.

Sir, we recognised at.all times the importance and complexity of this project. And so between the feasibility study in 1980 and the formation of the joint