Toshiba seeks financial help with £8bn UK nuclear project

Guardian Web |

Toshiba, the technology company at the centre of plans to build more nuclear reactors in Britain, is looking for outside help to fund its £8bn programme after a collapse in its share price.

The Japanese group is in talks with local financial institutions to support the construction of an atomic plant near the Sellafield facility in Cumbria, after running up losses following an accounting scandal.

The emergence of Toshiba’s problems will add to worries over Britain’s nuclear plans after the French energy group EDF, which plans to build the Hinkley Point C station in Somerset, dropped out of France’s CAC 40 index of leading shares.

There is widening concern in the City about the escalating costs of huge nuclear projects, which are damaging company share valuations and undermining the government’s commitment to new nuclear at a time when it has promised to phase out coal-fired power stations.

“It has become difficult for Toshiba to do this (fund the NuGen programme in the north-west of England) on its own,” one source told Reuters, which reported that Toshiba had hired HSBC bank to help find new funds.

On Monday, the Japanese financial regulator recommended that Toshiba be fined 7.37bn yen (£40m) for overstating profits and the share price of the company is down 40% since the start of the year.

Toshiba is a 60% shareholder in the NuGen project to build 3.4 gigawatts (GW) of electricity generating capacity close to the Sellafield plant, where spent fuel is reprocessed.

Neither Toshiba nor NuGen, a partnership with Engie (formerly GDF Suez) of France, was available for comment. The cost of building three reactors designed by a Toshiba subsidiary, Westinghouse, was estimated two years ago at £8bn but experts believe that figure could have at least doubled. That is in line with the price tag for Hinkley, which EDF puts at £18bn.

The 3.2GW Somerset reactors, to be built by EDF with the help of Chinese state companies, have been given the go-ahead by the UK government but the project is awaiting the final investment decision from France.

This week EDF blamed the 85% holding by the French state and lack of free float shares for its removal from the CAC index. But many analysts in the City of London have released gloomy equity forecasts on EDF, fearing Hinkley might go over budget like the company’s Flamanville reactor project in Normandy.

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