CONFIDENTIAL
035252 MDHIA 3928
PARTIES WITH HUGE RESOURCES AT THEIR DISPOSAL:
(E) FEEDBACK HERE IS THAT ALL FOUR PREQUALIFIED CONSORTIA WILL MAKE BIDS.
3. WE ACCEPT THAT FIXED PRICE LUMP SUM BIDS MAY COME IN DEARER: PASSING THE RISK TO THE BIDDERS CANNOT BE AT NO COST TO US. BUT COMPETITION IS KEEN, AND BIDDERS WILL BE UNDER GREAT PRESSURE NOT TO SET TOO HIGH A PREMIUM FOR TAKING ON THE RISK. WE BELIEVE THAT THE CERTAINTY ABOUT COSTS WILL BE WELL WORTH THE EXTRA PRICE WE MAY HAVE TO PAY.
4. ON THE QUESTION OF FINANCING, WE HAVE ALL ALONG MADE IT CLEAR THAT OFFERS OF FINANCE ARE NOT COMPULSORY. NO CONSORTIUM SHOULD BE INHIBITED ALTOGETHER FROM SUBMITTING A CONSTRUCTION BID BECAUSE THEY CANNOT GET LENDING BEYOND 1997 UNDERWRITTEN NOW. IN ANY CASE, WE HAVE INDICATIONS THAT COMMERCIAL BANK LOANS STRADDLING 1997 WILL BE AVAILABLE. SOME QUESTIONS ABOUT SARG SOVEREIGN RISK HAVE BEEN RAISED BY EXPORT CREDIT GUARANTEE AGENCIES: WE WILL TELEGRAPH ON THIS SEPARATELY.
5. SOME CONSORTIA HAVE LABOURED UNDER THE MISAPPREHENSION THAT WE REQUIRE ALL OFFERS OF FINANCE TO BE FULLY SIGNED UP WHEN TENDERS ARE SUBMITTED CON 16 DECEMBER). WE HAVE CLARIFIED THAT AT THE TIME TENDERS ARE SUBMITTED, ALL WE NEED IS SUFFICIENT COMFORT THAT ANY FINANCING OFFERED WILL BE MADE AVAILABLE WHEN THE CONTRACT IS SIGNED.
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ALL THESE POINTS HAVE BEEN DEPLOYED HERE PUBLICLY. WE SUSPECT THAT THE JITTERS YOU HAVE PICKED UP ARE THE RESULT OF KEEN COMPETITION RATHER THAN ANY PREMONITIONS THAT THE TENDER EXERCISE MIGHT FAIL.
WILSON
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CONFIDENTIAL
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