FORUM Finance

Jan 17 2019

Hitachi confirmed the freezing of a project to build nuclear power plants in the UK

The Japanese conglomerate Hitachi announced that it had stopped working on the Horizon Project nuclear project in the UK, thus confirming the information that appeared in the media last week. 

Hitachi stops the construction of reactors for an indefinite period and writes off the assets of the British nuclear business, and therefore will record a one-off loss of 300 billion yen ($ 2.8 billion) for the fiscal year ending in March 2019. 

The Japanese conglomerate deteriorated its net profit forecast for the current fingod to 230 billion yen from 530 billion yen. 

Hitachi took over the construction of two nuclear reactors on the island of Anglesey in north Wales after the purchase of the British company Horizon Nuclear Power in 2012. 

In the spring of 2018, Hitachi chairman Hiroaki Nakanishi discussed the project with British Prime Minister Teresa May, and then London agreed to allocate about 2 trillion yen (£ 14.5 billion) to finance the project, which is more than two-thirds of its total cost. The remaining 900 billion yen was supposed to be provided by a consortium of Japanese and British investors and Hitachi, but the company failed to attract Japanese investors. 

At the end of last year, project participants turned to London for additional funding, but the parties did not advance in these negotiations, despite the growing distrust of the May government in the context of an impending Brexit raised questions about the prospects for nuclear energy in the UK as a whole. 

‘Despite the efforts of all stakeholders, we have not been able to reach an agreement,’ says a press release from Hitachi. 

As a result, the Japanese conglomerate considered the project inappropriate from an economic point of view and decided to suspend work on it. 

‘Obviously, time is needed to develop a financial structure for the Horizon Project, as well as conditions for the construction and management of nuclear power plants,’ the report says. 

The Hitachi decision calls into question the possibility of fulfilling the ambitious task of replacing old atomic reactors, set by the British authorities. In November, another Japanese company, Toshiba, abandoned plans to build a Moorside nuclear power plant in the UK. Thus, the only new project in this area is Hinkley Point in the south-west of England. 

Hitachi’s withdrawal from the UK also points to serious problems for Japanese exporters of nuclear technology that relied on the British market, since their operations in Japan are limited after the accident at the Fukushima nuclear power plant in 2011.

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