TNAG-2981-FCO40-1473-Guangdong-nuclear-power-station-project-1982 — Page 39

CONFIDENTIAL

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WOULD BE WILLING TO CONSIDER PROVIDING A GUARANTEE FOR THE FOREIGN

LOAN (90 PER CENT OF TOTAL COST). WE WELCOMED THIS AS A HELPFUL

INITIATIVE FROM THE CHINESE SIDE, BUT REPEATED OUR PRE-CONDITION

THAT GEC MUST SECURE THE CONVENTIONAL ISLAND. I CAUTIONED THAT IT

WOULD NOT BE EASY TO ACHIEVE A 25 PER CENT FOREIGN EQUITY HOLDING

BUT UNDERTOOK TO DISCUSS THIS IN HONG KONG.

OFF-TAKE AGREEMENT

6. THE CHINESE WERE CLEARLY ANXIOUS TO SEE PROGRESS ON THIS. WE

EXPLAINED THAT CLP AND GPC WERE DISCUSSING PRICING DETAILS AT

PRESENT, BUT AGREED THAT TRI-PARTITE DISCUSSIONS BETWEEN THE CHINESE

AUTHORITIES, HONG KONG (BOTH GOVERNMENT AND CLP) AND THE UK WOULD BE

NECESSARY WHEN THE UTILITIES HAD CLEARED SOME OF THE BASIC GROUND.

FURTHER MEETINGS

THE CHINESE PROPOSED THREE FURTHER SETS OF MEETINGS: TECHNICAL

DISCUSSIONS WITH GEC IN PEKING, SIMULTANEOUSLY WITH DISCUSSIONS ON

THE OFF-TAKE AGREEMENT IN HONG KONG: FOLLOWED BY RENEWED HIGH LEVEL

GOVERNMENT TO GOVERNMENT DISCUSSIONS IN PEKING TO DRAW UP A FINAL

SET OF PROPOSALS.

7. TIMING DEPENDS ON COMPLETING THE PREPARATION FOR GEC'S MEETINGS:

WE HAVE AGREED THAT GEC SHOULD BE GIVEN A LIST OF THE QUESTIONS THE

CHINESE WANT TO RAISE AND SHOULD SUPPLY WRITTEN ANSWERS FIRST, TO

MAKE THE BEST USE OF EVERYONE'S TIME IN PEKING. CHINESE HAVE

UNDERTAKEN TO SEND QUESTIONS (THROUGHT YOU) WITHIN TWO WEEKS. THIS

APPEARS OPTIMISTIC. FIRST CHINESE PROPOSAL, NEVERTHELESS, IS THAT

THE DISCUSSIONS IN PEKING AND HONG KONG SHOULD TAKE PLACE IN LATE

JANUARY OR EARLY FEBRUARY. (DISCUSSIONS AMONG CHINESE IN MARGINS OF MEETINGS SUGGEST FRENCH MAY BE VISITING 10TH FEBRUARY ONWARD?). ON

THE OFF-TAKE AGREEMENT WE WILL CONTINUE DISCUSSIONS WITH STONES ON

HIS ARRIVAL IN UK NEXT WEEK FOR ONE OF REGULAR PROGRESS MEETINGS ON

CASTLE PEAK.

COMMENT

8. ATMOSPHERE WAS FRIENDLY IN ALL DISCUSSIONS. THE CHINESE

CONCENTRATED ENTIRELY ON THE FRENCH OPTION, ONLY COMMENTING ON THE

ANGLO/AMERICAN OPTION IN RESPONSE TO MY QUESTIONS. WE BELIEVE

LATTER OPTION IS NOW DEAD UNLESS THERE WAS AN UNEXPECTED CHANGE IN

US POSITION. THIS WAS CONFIRMED IN MESSAGE SENT TO WALTER MARSHALL

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CONFIDENTIAL