CONFIDENTIAL
Mr Ranson confirmed that ECGD really required a 100% guarantee for
the foreign loans, and that in practice this could only come from
the Bank of China. The Hong Kong Government was unlikely to offer
to guarantee any portion, and the only other party likely to,
China Light and Power, would be unacceptable to ECGD since they
There was already had a very high exposure with that company.
some discussion as to whether the 4% equity held outside China
could be deducted, leaving a need for a 96% guarantee and Mr Ranson
conceded that this was considerably better than the 60% previously
discussed. Nevertheless 100% was his objective and ways should be
considered to persuade the Chinese of this.
ACTION
There was some discussion as to the form a paper to Ministers
might take. Concern was expressed that some of the options contained
in Mr Ranson's letter ie 15 years plus capitalisation plus locals,
would simply be too expensive and it was finally agreed that a draft
Consideration would then be would be prepared and circulated.
given as to whether it could be submitted to Ministers but
cach
rather than actually referring to values, approval should be sought for a subsidy up to a given percentage level, allowing officials
to negotiate various options within that overall limit.
Mr Newton
Recent reports indicated that the Chinese were attempting to find
out from the French whether the advantageous financial terms
offered by President Giscard were still available. It was agreed
that FED/FCO and DOI would jointly draft a telegram to Paris asking
whether there was any progress in this area; it would be copied to
BTC Hong Kong together with a separate request for information.
In parallel, ECGD would raise the matter informally with COFACE.
FED/DOI
No comments yet.
Private notes are available after approval.