6.3.2
(b)
(c)
(d)
(e)
(f)
(g)
It was assumed in the Feasibility Report that the interest on loans, payable during the construction period, could be capitalised and that the interest on this capitalised portion would also be 7,5%.
The Reviewing Board felt that although this might be possible in practice, it was too optimistic to be used in the feasibility study. A more conservative figure was recommended.
The latest information available on the French loans was 7.75%.
Interest rate on commercial loans was assumed to be 10% in the Feasibility Study Report.
With interest rates at 18%-19% in the States and 15% 16% in the international market, the Reviewing Board recommended that a more conservative figure should be used.
The Tax Authorities advised that a profit tax of 33% applied on the Gross profit and not net profit, as assumed in the Feasibility Study Report.
GPC was continuing to contest this point. No final ruling had been made, but even if the ruling turned out to be unfavourable, spread over a period of 16 years, a payment of US$ 1.6 billion would be involved, making it approximately US$ 40 million per year, being higher during the earlier years and decreasing subsequently.
GPC was advised that exemption was available only from Profit Tax during the first year of operation and discount of 50% for the following two years. Exemption from the 5% Business Tax was not automatic and available only when the profitability of the Joint Venture was affected.
Price of Land.
Criticisms were raised with the price of land assumed.
The Reviewing Board said that land was the only commodity which GPC could put in as equity and that too had been given away very cheaply.
The Feasibility Study had assumed a price of RMB 6.75/sq m/year for the land on which the nuclear was to be built. The protective zone was calculated as being RMB 2/sq. m / year.
Compared with the standard price of RMB 5 -300 /sq. m/ year in China, GPC was criticised for using a price which was lower than the lowest.
Decommissioning Costs.
The Feasibility Report had assumed a figure of 10% of the total investment. People connected with the nuclear programme advised that this figure was too low.
Reference material from Edison Co. was studied and for a 1000 MWe reactor, a decommissioning cost of 50 million US dollars was reported in 1977. Similar figures were available from Germany.
Considering the two reactors for the Guangdong Nuclear Power Station, this would work out to US$ 1 billion in the year 2009.
Since there was no actual experience of reactors being decommissioned, it was difficult to predict exactly.