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Olkiluoto 3 three years delayed and three other blows to the nuclear industry

17.10.2008 Lauri Myllyvirta

Financial Times reveals that the completion Olkiluoto 3 is expected in 2012, according to a new timetable submitted to TVO by Areva. Originally the plant was supposed to be online by mid 2009, so this means a three year delay on top of the original 4.5 yr construction schedule.

The delay follows a logical pattern where each month of construction causes a delay of a month. Construction has now been going on for three years and the project is less than halfway to completion. Only 30 % of design documents have been approved.

Over the last few days, Areva has been busy trying to convince its stakeholders that it will be able to split the soaring extra costs of OL3 with the Finnish investor TVO. Areva has lately started to give out details of the confidential plant contract to media, claiming that TVO committed e.g. to approving each design document within two months of receiving it. Areva itself admits there is no black on white of these provisions but refers to an alleged spoken contract. TVO says Areva is outright lying about the contract, which means one of them certainly is not sticking to the truth.

This new Areva media strategy might be explained by the fact that the construction division is pulling down Areva’s results by generating major losses in Olkiluoto, Finland and Flamanville, France. In addition, Areva relies on short term loans to finance these projects and is likely to be experiencing trouble getting the money because of the credit crisis, so news on even more trouble could not come at a worse moment in time.

From the Finnish perspective, it is clear that uncertainty of the division of the extra bill will remain for a long time and eventually the dispute will be fought out in court. The cost overrun plus contract penalties were estimated at EUR2.2. billion already before the new delay. This offers an interesting precedent to prospective nuclear investors – expect to end up in court with your supplier, who will be trying to make you foot an extra bill amounting to hundreds of millions.

Nuclear black Friday?
On the heels of the news from Olkiluoto, the nuclear plans of the UK government and French nuclear industry received another heavy blow when the second consultation on nuclear newbuild carried out in Britain was found to have been rigged toward nuclear. UK marketing research watchdog ruled that Opinion Leader Research, the company hired by the government to carry out the consultation, was responsible for fixing the results. The ruling concludes that “information was inaccurately or misleadingly presented, or was imbalanced, which gave rise to a material risk of respondents being led towards a particular answer” and that “this was not a minor or trivial breach.” The ruling shows that the UK government is doing its best to bypass public opinion and democracy in its pursuit for French nuclear power. The ruling might and should force the government to conduct a third hearing. The first one was also found biased by the High Court.

Two more pieces of information came in today. Lowest bid for the nuclear reactor planned in Mochovce, Slovakia was three times the target price. In Bulgaria, the government felt forced to announce EUR150 mln of aid to Belene nuclear project, which is most likely to be found to constitute illegal state aid.