GUANGZHOU'S municipal government has earmarked for sale a plot of prime land to raise funds for the construction of the first phase of the Guangzhou Metro. The plot, in Tianhe district, has an area of 5.2 sq km. Vice-mayor Shi Anhai said yesterday the State Council had approved the revised metro plan, which would increase the length from 12.7 km to 18.1 km and the number of stations from 12 to 16. He also contradicted an earlier remark by Guangdong governor Zhu Senlin that French companies would obtain some contracts to supply facilities for the metro. He said that on preliminary examination, the bids of the French firms had been less competitive than those from the United States, Germany and Britain, and that their tenders had been ''a different matter because their country sold fighter airplanes to Taiwan''. The construction of the first phase will start at the end of the year and will take about five years to complete. Mr Shi said almost half of the one billion yuan (about HK$1.35 billion) construction cost would be financed by foreign government loans, from the countries of the companies given the facilities contracts. The other half would be raised locally, through the sale of 24 plots along the first phase of the line, the municipal government's budget for infrastructure, and taxes including capital appreciation tax from property transactions. ''Of course funds from these sources are not enough, so we are planning to offer a plot of land for bidding in order to raise the additional funds needed,'' said Mr Shi. ''This plot of land is especially reserved for future development by the municipal government and has very good potential.'' But he added that the usable area might be smaller because some of the land was occupied by the newly built Guangzhou Horse Racing Course and factories. According to Guangzhou officials, the municipal government has invited planners from Hongkong and the US to map out the area. The government was said to be keen to build two 140-storey commercial buildings at the centre as the city's landmark. Mr Shi denied as ''totally groundless'' rumours that the plot had been acquired by an unnamed company. ''Some even faked a government document which showed that I had personally approved the deal,'' he said. On the foreign companies chosen to provide facilities, a key consideration would be the terms of government loans. ''While the metro system has immense social benefit, the economic benefit is not so obvious. Thus we have to rely on government loans on favourable terms to help finance the project,'' he said.