OPTION 2
UK goods only
CONFIDENTIAL
Subsidy Element
72% interest rate = 37.20% over 12 years and 38.85% over 15 years
10% interest rate = 28.09% over 12 years and 29.34% over 15 years.
Add 4% to all figures for six year drawdown over 8 year construction period
Advantage
the least costly option
Disadvantage
most unlikely to be acceptable to the Chinese when viewed against
the Castle Peak packages and therefore destructive to the credibility
of the negotiated contract approach.
See Recommendation 9.
OPTION 3
UK goods plus locals
Subsidy Element
73% interest rate
--
43.76% over 12 years and 45.71% over 15 years
10% interest rate 32.3 % over 12 years and 33.71% over 15 years.
Add 4% to all figures for six year drawdown over 8 year construction period.
Advantage
an attractive package in terms of the subsidy and near to the terms
agreed for Castle Peak (at 73%)
Disadvantage
capitalisation is not included, and, if we are to make a "best"
offer at the outset Chinese expectations would be dulled - as would
our credibility.
to offer locals cover might set an unwelcome precedent in this market
CONFIDENTIAL