British Govt, Hitachi Agree to Launch Talks on N-Plant Project

June 5, 2018

London- The British government and Hitachi Ltd. <6501> reached a basic agreement Monday to enter into negotiations on a proposed nuclear plant project in Britain, energy secretary Greg Clark said.

The agreement came after the Japanese machinery maker once considered a withdrawal from the project due to its costs that turned out to be way higher than initially expected.

"For this project, the government will be considering direct investment alongside Hitachi, Japanese government agencies and other parties," Clark told Britain's parliament.

At the same time, the secretary stressed that the talks are still in their early stage.

"No decision has yet been taken to proceed and the successful conclusion of these negotiations will of course be subject to full government, regulatory and other approvals," Clark said.

In the project, Hitachi plans to start the construction of two nuclear reactors on the island of Anglesey in 2020 through a British subsidiary it acquired in 2012.

With the total project costs now estimated at as much as 3 trillion yen, Hitachi sees that running the project on its own would be a great risk and has been seeking financial assistance from the British government.

Hitachi Chairman Hiroaki Nakanishi met with British Prime Minister Theresa May in London last month to directly ask for assistance.

Based on the request, the British government proposed making public-private investment and loans worth a total of some 3 trillion yen jointly with the Japanese government.

While the British government promotes nuclear power generation in an effort to achieve its energy mix goal, the proposal involving the use of public funds has provoked a backlash from the British public.

The British government and Hitachi apparently remain apart over the price of electricity generated at the reactors.

"A key focus of discussions with Hitachi has been, and will continue to be, achieving lower-cost electricity for consumers," Clark said.

Hitachi said in a statement that it welcomes the launch of full-scale negotiations with the British government, explaining that it reflects the achievements of prior talks.

The company said it will engage in the negotiations as it examines the project in detail in light of economic rationality.

Japanese industry minister Hiroshige Seko told a press conference in Tokyo, "We'd like to have active discussions, including on how the Japanese government should offer assistance."

Seko said the assistance is expected to be provided by government lenders, such as the Development Bank of Japan, the Japan Bank for International Cooperation and Nippon Export and Investment Insurance. Jiji Press