TNAG-1059-FCO40-1309-Guangdong-nuclear-power-station-project-1981 — Page 58

CONFIDENTIAL

OPTION 2 - UK goods only

ECGD have calculated that the subsidy elements would be 37.20% over 12 years and 38.85% over 15 years.

Advantage

Disadvantage

OPTION 3

-

the least costly option

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.

UK goods plus locals

Subsidy of 43.76% over 12 years and 45.71% over 15 years.

Advantage

Disadvantage

-

an attractive package in terms of the subsidy element.

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 (Castle Peak)

this option only gives real room to manoeuvre on the

length of credit since the definitions of UK and

local content are fairly precise.

locals were not covered on the Hong Kong projects and

we do not expect great interest in the subject by the

Chinese. To offer this might set an unwelcome precedent.

sensitive to drawdown fluctuations which could take the

subsidy element beyond 50%.

OPTION 4 UK goods plus capitalisation

Subsidy 46.54% over 12 years and 48.66% over 15 years.

Advantage

this offers the nearest equivalent to the Hong Kong

package. It contains a mixture of all the elements we

can offer for China and gives credibility to the negotiated contract "best" offer approach