TNAG-2981-FCO40-1473-Guangdong-nuclear-power-station-project-1982 — Page 230

CONFIDENTIAL

AMEX A

GUANGDONG NUCLEAR POWER STATION PROJECT

Background

1 In 1980 China Light and Power Company Limited (CLP) and the Guangdong

Electricity Company (GEC) of the People's Republic of China (PRC) conducted

a joint study on the feasibility of constructing and operating a nuclear

power station in Guangdong, part of the output of which would be sold to

Hong Kong. Ministers approved a continuing UK industrial and official

involvement in the study, and gave their support in general terms subse-

quently to the Chinese and to CLP. Ministers have also agreed that since

China is a Nuclear Weapons State we should not seek to insist upon the

application of safeguards, but that we should seek assurances that

equipment and materials will not be diverted to military use nor re-

exported without prior consultation and will receive adequate physical

protection.

2 The study was formally given to the Chinese in December 1980 and is

now under consideration in Peking. The study concluded that it is feasible

for the Guangdong Electricity Company and CLP jointly to construct and

operate a 2 X 900 MW PWR station some 30 miles north-east of Hong Kong.

The total cost of the project is estimated at £2,000m; the foreign exchange

costs would be met from electricity sales to Hong Kong. This project is

being weighed by the Chinese against the alternative possibility of developing

hydro-electricity in other areas of China.

3

There can be no certainty that the Chinese will proceed with the

project. The suspension of a number of capital construction projects

and announcement of a more rigorous policy of retrenchment suggests that

they will approach it with caution. We must nevertheless work on the

assumption that the project will go ahead. In that event it would offer

the prospect of substantial commercial benefits to UK industry. It would

also lead to further co-operation between