TNAG-1658-FCO40-2306-Daya-Bay-nuclear-power-station-project-safety-concerns-in-Ho-1987 — Page 385

CONFIDENTIAL

For Information

(28.4.87)

XCC1(87)21 Copy No

NOTE FOR EXECUTIVE COUNCIL

HONG KONG NUCLEAR INVESTMENT COMPANY LIMITED

(HKNIC) AND THE SCHEME OF CONTROL

166/3

71

22

Roknight

ра

Daya Blay

Introduction

On 7 April 1987,

after considering memorandum XCC(87)58 dealing

dealing with the China Light and Power Company Limited (CLP) 1986 Financing Plan, the Council advised and the Acting Governor ordered, inter alia, that a note should be prepared for the Council setting out the difficulties of bringing HKNIC under the Scheme of Control (SCA).

2

Members will be asked to note the contents of this memorandum which has been prepared for their information. It describes the purpose of the CLP

CLP Scheme of Control, the arrangements for the sale of electricity to Hong Kong from Daya Bay, and the reasons why, as a result of the arrangements concluded between Hong Kong Nuclear Investment Company (HKNIC) and Guangdong Nuclear Investment Company (GNIC), it is neither necessary nor possible for HKNIC to be covered by the CLP Scheme of Control.

Purpose of SCA

3.

The agreement between the Government and the companies (CLP and ESSO subsidiaries) aims to ensure that an adequate supply of electricity is maintained at all times to meet increasing demand and that consumers should pay a reasonable price for it. To these ends the Scheme provides for Government to approve a level of tariff which will enable the companies to meet their operating costs, service their debt, pay their shareholders a return on their investment and maintain the companies' financial viability. To achieve this the agreement provides for the approval by Government of

of a financing plan including the tariffs which need

the tariffs which need to be charged to finance that plan.

4

Final authority for approval of the plan rests with the Executive Council. Moreover the plan is subject to an annual review by the Government.

Financial provisions for supply of electricity from Daya Bay

Under

HKNIC is a 25% partner in the joint venture company which is building and will operate the Daya Bay plant.

5.

CONFIDENTIAL