TNAG-2981-FCO40-1473-Guangdong-nuclear-power-station-project-1982 — Page 247

CONFIDENTIAL

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the UK, Hong Kong and the People's Republic of China (PRC) in a period when re-

assurance over the future of Hong Kong will be important given the expiry in 1997

of the lease on the New Territories. While the UK can supply the bulk of the

necessary plant and equipment, we cannot supply the heart of the station - the

pressurised water reactor and the remainder of the nuclear steam supply system

representing about 15% of the total project cost. A partnership with a FWR

Framatome (French) or Westinghouse (American) are the front runners

manufacturer

- would therefore be necessary. The French position on non-proliferation is

similar to our own and while there are some doubts about the US Government's

attitude to the sale of nuclear equipment direct from the United States, Westinghouse

would be able to supply from one of their licencees outside the USA. Both have

indicated their willingness to work with the UK in this way. Although the final

decision rests with the Chinese the UK's chances of maximising its own share of

the contract will be helped if we can present a well-prepared package to them in

good time.

The UK Position

4.

The UK provided technical support to CLP from Dr Walter Marshall (Chairman

of UKAEA) and partly as a result of his efforts the UK has the possibility of

gaining a major share of the project. CLP favour a substantial UK involvement in

the project.

Both the French and the American companies currently appear to

perceive the UK as being the front runners to win a major share. The Government

of Hong Kong, naturally, supports the UK's interest as UK participation would be

arguably the best way to meet its requirement for safety and continuity of supply

of electricity.

5. The UK's negotiating position is based upon the need for the nuclear power

station to be partly financed by the sale of electricity to Hong Kong. This in

CONFIDENTIAL