TNAG-2981-FCO40-1473-Guangdong-nuclear-power-station-project-1982 — Page 37

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CONFIDENTIAL

CONFIDENTIAL

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FM DOI 292010Z NOV 82

TO IMMEDIATE PEKING

TELEGRAM NUMBER INDUS 69 OF 29 NOVEMBER

AND TO HONG KONG PARIS

INFO SAVING WASHINGTON

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Mr. Holare

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Mr. Thomson FED

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GUANGDONG NUCLEAR PROJECT: LI PENG'S VISIT

THIS TELEGRAM REPORTS MAIN POINTS DISCUSSED IN GOVERNMENT TO

GOVERNMENT TALKS THURSDAY 25 AND FRIDAY 26TH NOVEMBER. MR BAKER

OPENED THESE TALKS AND MR JENKIN CHAIRED A ROUND-UP SESSION. FULL NOTES OF MEETINGS AND COMPLETE PROGRAMME FOLLOW BY BAG. DISCUSSION

FOCUSSED EXCLUSIVELY ON A PROJECT BASED ON FRENCH NUCLEAR TECHNOLOGY WITH WHICH THEY WERE CLEARLY VERY IMPRESSED. WHEN

QUESTIONED ABOUT THE ANGLO/AMERICAN PACKAGE WHICH WE HAD BEEN ASKED

TO PREPARE IN GUANGSHAO IN JULY, THE CHINESE SAID THEY WERE NOT

NOW PURSUING THIS ALTHOUGH THEY DID ADD QUOTE AT LEAST FOR THE TIME

BEING UNQUOTE.

SCOPE OF SUPPLY

2. IN RESPONSE TO CHINESE PROPOSALS FOLLOWING FRENCH VISIT (SEE

INDUS 38 OF 19TH NOVEMBER FROM PARIS) MINISTERS AND OFFICIALS MADE

IT PLAIN THAT THE UK WOULD NOT BE PREPARED TO ACCEPT A SUBSIDIARY

SUB-CONTRACTING ROLE IN AN ALL FRENCH PROJECT, SUPPLYING DISPARATE

ITEMS OF EQUIPMENT TO FRAMATOME AND ALSTHOM: GEC MUST BE AWARDED

THE CONTRACT FOR THE WHOLE CONVENTIONAL ISLAND TO SECURE BACKING

FROM THE UK GOVERNMENT FOR THE PROJECT (INCLUDING THE USE OF OUR

GOOD OFFICES IN HONG KONG). HOWEVER, WE AND GEC WOULD BE CONTENT TO

SUPPLY THE WHOLE CONVENTIONAL ISLAND TO FRAMATOME, WITH FRAMATOME

AS THE LEAD CONTRACTOR. THE CHINESE ASSERTED THAT GEC'S PRICE WAS

20 PER CENT HIGHER THAN ALSTHOM'S: WE POINTED TO THE DIFFICULTY IN

MAKING PRICE COMPARISONS AT THIS EARLY STAGE. THEIR PRIMARY CONCERN,

HOWEVER, WAS THAT THIS WOULD BE GEC'S FIRST 900MW SET, IN CONTRAST

TO ALSTHOM WHO HAD 23 SETS IN OPERATION. LI PENG WAS PARTICULARLY

CONCERNED ABOUT THE POSSIBILITY OF OUTAGES (FAILURES) IN THE FIRST

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