GRS 550)
CONFIDENTIAL
FM PEKING
TO DESKEY 04130OZ DTI
TELNO INDUS 003
OF 0412122 JANUARY 86
AND TO DESKBY 04130OZ FCO
INFO IMMEDIATE BTC HONG KONG
INFO ROUTINE PARIS
"SENTIAL
Trest
MKK 166/1
RECEIVED IN REGISTRY
06 JAN1986
7
FROM BENJAMIN FOR DTI DUTY OFFICER TO PASS TO DOBBIE
DESK OFFICER
MGMTRY
INDEX
PA
√ct on Taken
GUANGDONG NUCLEAR PROJECT.
1. SUMMARY: BROAD AGREEMENT ON MOST OUTSTANDING POINTS EXCEPT LEVEL
OF ECGD PREMIUM, ON WHICH SEE MIFT.
2. DETAIL: IN MEETINGS TODAY WITH BANK OF CHINA AND JVC WE
DISCUSSED THREE OUTSTANDING FINANCIAL ISSUES RAISED BY BOC:
(A) LEVEL OF ECGD PREMIUM
(B) LETTER OF COMFORT ON LOAN DEFEREMENT
(C) LOCAL COSTS
3. ON PREMIUM, WE OFFERED TO REDUCE THE FINANCE CHARGE TO 2.3
PERCENT OF LOAN VALUE, ARGUING THAT THIS TOGETHER WITH THE RESIDUAL
ELEMENT OF ABOUT POUNDS 1 M OF CONTRACT PREMIUM IN THE GEC CONTRACT
PRICE WAS COMPARABLE TO THE FRENCH FINANCE CARGE. INDEED IF BANKS'
FEES WERE TAKEN INTO ACCOUNT, THE UK OFFER WAS MORE ATTRACTIVE.
BOC EXPRESSED THANKS FOR THIS CONCESSION SEMICOLON THEY DID
NOT (NOT) SEEK TO CHALLENGE THE ARRANGEMENTS FOR PREMIUM IN THE
CONTRACT PRICE. HOWEVER, THEY DEMANDED A FURTHER REDUCTION IN THE
FINANCE CHARGE TO 2.0 PERCENT OF THE LOAN VALUE. THEY WERE CLEARLY
UNWILLING TO BE DRAWN INTO DETAILED COMPARISONS OF THE UK AND FRENCH
PREMIUM. WHILST MAINTAINING THAT 2.3 PERCENT WAS HIGHER
THAT THE FRENCH CHAREGE, THEY ALSO STATED TOWARDS THE END OF
DISCUSSIONS THAT THEIR STANCE ON PREMIUM TOOK INTO ACCOUNT THAT THE
GEC PRICE WAS HIGHER THAN THE JVC WOULD HAVE WISHED AND THAT
THEY WOULD NOT HAVE PRESSED THE POINT IF IT HAD BEEN A QUESTION OF
PREMIUM ALONE. IN SHORT THEY WERE DETERNINED TO HAVE A NEGOTIATION,
REGARDLESS OF ANGLO/FRENCH COMPARISONS.
4. WE MAINTAINED THE LINE THAT THIS UNIQUE CONCESSION HAD BEEN .
AUTHORISED BY THE PRIME MINISTER AND WAS NOT NEGOTIABLE, BUT
FAILED TO SHIFT BOC FROM THEIR ORIGINAL POSITION.
5. LETTER OF COMFORT ON LOAN DEFEREMENT. BOC PRESSED FOR TWO
FURTHER POINTS BEYOND THE ASSURANCE GIVEN IN OUR DRAFT:
>
A B
/(A)
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