COMMERCIAL IN CONFIDENCE
volunteered that they thought the first two methods, namely the turnkey
ntract, and engineering directly by KEC/CLP were inappropriate and that we should therefore use either method 3 or method 4. To our surprise one of the other members of the KEC team then spoke up strongly in favour of the turnkey contracts because transfer of technology was unimportant compared with the necessity of getting a plant to generate electricity. This statement brought scowls of disapproval fran Mr Shih and Mr Gang, who however glossed over the problem by saying of course we must look at all ideas before coming to a final decision. It was noteworthy, however, that the dissident member of KEC appeared for the afternoon session for only two minutes - just long enough to apologise for his absence for the rest of the day because of a severe and sudden headache which had come on.
A helpful observation on this discussion concerning constructural methods was the implied sympathy of Mr Lingafelter to the argument. This he con- firmed in later informal discussions. Clearly he has been educating the Chinese about the nature of contracts to build nuclear stations so that they now make a clear distinction between nuclear islands, balance of plant and civil engineering. I then introduced the safety arguments which led me to the conclusion that the joint project must take the safety responsibility itself in a very positive way and that that activity should be supplemented with a safety approval organisation in China which ought to be similar to our own NII. When I invited camment on this section it brought forth long speeches from Mr Shih and Mr Gang about the great importance which the PRC always pay to all possible safety questions. They said they agreed with me completely on this matter that the project must take prime responsibility for the safety and they must do so in such a way as to maintain everybody's confidence. 1 referred to the earlier statement of Sir Lawrence Kadoorie and explained that that was a stronger statement than I had felt able to make in the paper. Form the subsequent discussion I got the impression that they were accepting the sense of Kadoorie's proposal without being quite certain why it was necessary.
During lunch I had an opportunity to explore this with Mr Lingafelter who clearly understood what I was saying and what Kadoorie was saying, and agreed with it. He is, of course, very sad that the American Safety Authority have lost all credibility but he is impressed with the fact that nuclear power programmes are halted throughout the world because of public concern on safety, and he interpreted the statements I had made and the statement made by Kadoorie as an attempt to pre-empt all such discussion in Hong Kong and to take such a position that it was not necessary for CLP or the Government of Hong Kong to defend what was done. Instead they would both take the simple view if this plant is safe enough for the UK surely it's safe enough for us. Clearly it will be helpful for Mr Lingafolter to be explaining that point in private to the Chinese.
In the paragraph on Training, Operation and Maintenance, I had concluded that we needed an agreement wiht an experienced and appropriate utility and that this would affect a contract strategy. Mr Gang said that he can- pletely agreed.
The discussion on indigenous manufacture was interesting and lengthy. The Chinese explained that they had no ambitions to manufacture equipment on the first reactor and that they expected to import all items of equipment.
I replied that I thought that they were very sensible, but what about the civil work? I thought they should attempt to do that themselves, so as to
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