TNAG-1507-FCO40-2065-Guangdong-nuclear-power-station-project-at-Daya-Bay-safety-c-1986 — Page 121

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HONG KONG LEGISLATIVE COUNCIL - 15 October 1986

The conditional nature of the endorsement given by the Government was deliberate. Arrangements for the purchase of electricity from Daya Bay had not, at that stage, been finalised. In the interest of consumers, the Government conveyed to CLP the view that further discussions should take place on the proposed fiscal and commercial terms. After a year of intense negotiations, additional benefits for consumers were secured. These included: concessionary tax rates for the project; the introduction of a flexibility provision concerning the purchase of electricity, should demand be less than that forecast; Mr. CHEUNG Yan-lung will be reassured by this, and, for the larger part of the electricity to be bought, a ceiling on the price that would be paid during the first six years. It was on the basis of these successful negotiations that the Govern- ment, in January 1985, indicated to CLP and HKNIC that it had no objection to their entering into the contractual arrangements that had been agreed for the formation of the joint venture company, and the purchase of electricity from the project.

In considering the matter, various sensitivity studies were undertaken to examine the consequential effects of changed circumstances, such as delays in the construction, cost overruns, changes in fuel prices. Finally, taking into account all other relevant considerations, whether environmental or financial, the Government was convinced that the arrangements negotiated were in Hong Kong's interests. There was and still is every reason to diversify the sources of energy available to Hong Kong. Mr. Kim CHAM in his helpful speech has spoken of the volatility of fossil fuel prices in this connection.

Sir, in my speech on 16 July 1986 I referred to the Government's decision to have a full and independent evaluation of the financial aspects of the project and our engagement of merchant bankers for this purpose. The report produced, the Lazards' Report, has been commented upon by Members of this Council this afternoon and by the media. I must emphasise that the report was only part of the story. There were in addition detailed negotiations leading to the satisfactory conclusion of the Joint Venture Agreement with the beneficial terms to which I have already referred. Dr. Richard LAI, Mr. Hui Yin-fat, Mr. Martin LEE and others have suggested that it is unaortunate the Government has not released the Lazards' Report. This report naturally contained information which is com- mercially sensitive to all the parties involved. The Government cannot therefore release this information, nor would it be appropriate to publish the report which, as I have said, represented only part of the story. We should issue the paper that I have promised. This paper will give the information sought in the motion. That is what is required.

The need for the Government to maintain commercial confidentiality is, of course, self-evident. Indeed I am pleased to know that in a number of members speeches including those of Mr. SOHMEN, Dr. Ho Kam-fai, Mr. CHUNG Pui-lam, Mr. Peter WONG and Mr. NGAI the requirement for the Government to maintain commercial confidentiality is appreciated. This respect for confidentiality has allowed information (much of which is not available to shareholders) to flow