}
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14. Officials recommend that in principle HMG and HKG should offer to underwrite the HKNIC equity issue and guarantee to retain a holding of $40m of shares between them provided the UK has overall project leadership and Peking invests a similar amount. Officials would propose to sound out the Chinese on
this in early October. It will also be necessary to consider Vote and Accounting implications and procedures.
The Credit Package
15 Nuclear power stations are excluded from the Agreement on Guide lines for Officially Supported Export Credits (known as the Consensus) but under an agreement reached within the OECD in 1975 (the "Standstill Agreement") participants will not grant more
favourable terms than was their then normal practice. At that
time both the Americans and the Canadians considered 15 years credit and a 90% loan as being normal, while the EC countries normally considered 10 years credit and an 85% loan as appropriate for industrialised countries and 12 years credit and a 90% loan as appropriate for developing countries such as China. A list of the credit terms offered in recent known examples is at Annex A.
16.
Under the Standstill Agreement ECGD could agree support of a 90% loan over 12 years but would be reluctant to do so unless there was evidence of foreign competition on such terms. In the light of recent experience in Korea it is likely that the US would consider an 85% loan over 15 years, in which case it could be expected that the French and the Germans would be prepared to support similar terms. Since the objective is to secure a negotiated contract without competitive tenders then Departments would argue that the terms offered by ECGD in respect of the Korean contract which GEC gained and which the Chinese know about should be offered in this instance. The UK could hardly offer a
credible package without repeating the Korean terms.
17. Based on a possible UK supply of US $1000m (i.e. loan value US $850,) and an interest rate of 7.75% pa with the loan
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