OUTLINE OF POSSIBLE SCHEME
COMMERCIAL IN CONFIDENCE
ANNEX
Two companies would be set up, Power Supply Contractors Limited (PSC) and Power Supply Finance Limited (PSF). PSC would be owned by a consortium consisting of the NEB and the manufacturing and contracting companies contributing to the package. GEC and the other companies would contract on an item by item basis with this company to supply turbines etc. would provide the co-ordination of the package for this company together with engineering and technical advice on a consultancy basis.
2
CEGB
PSC would then contract to construct the power station and other items in the package for the second company, PSF, which would be owed by a consortium of banks. PSF would claim the tax allowances for the plant and buildings and sell them at a discount to the consortium of banks.
3 PSF would then lease the site on which the power station etc are built for a period of 10 years and 1 day from the China Light and Fower (CLP) and grant a lease-back to CLP for 10 years. At the end of the lease period CLP would become entitled to the whole interest in the power station etc, making a payment to PSF for the plant at market value and receiving a refund of lease rentals based on the residual value of the plant.
4
HMG would be able to give financial assistance to the project, either directly by way of grant to PSC or indirectly by taking say preference shares (with rolled up dividend entitlement) in PSF.
IC/1
16 May 1977
COMMERCIAL IN CONFIDENCE