TNAG-1059-FCO40-1309-Guangdong-nuclear-power-station-project-1981 — Page 30

SECOND DRAFT

CONFIDENTIAL

GUANGDONG NUCLEAR POWER STATION PROJECT

PEC'S REPUBLIC OF CHINA

ISSUES

To decide HMG's negotiating stance in relation to the financial package to be offered to the Chinese in support of the UK element in the Guangdong Nuclear Power Station Project (Annex A to be added), with particular reference to the rate of interest, the length of the credit, the inclusion of local costs, capitalisation

of interest and their effect on the overall subsidy element.

Having decided an outline buyer credit to then decide whether to make a formal offer to GEC prior to the forthcoming change in Consensus rates (and to allow this offer to stand for six months) or to make an offer on the basis of the new

Consensus interest rate (ie. after 16 November 1981).

OPTIONS

1

To decide upon an acceptable overall subsidy percentage and then to determine

its elements.

2

To offer a credit covering UK goods only;

3

To cover UK goods plus local costs;

4

To cover UK goods only plus capitalisation of interest;

5

To cover UK goods plus locals plus capitalisation.

CONFIDENTIAL

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