Sat, Jan 12, 2019 - Page 10 News List

Hitachi to halt UK nuclear work

FUNDING STRUGGLE:Investors applauded signs the firm might distance itself from nuclear power and the Brexit turmoil that has consumed the British government

Bloomberg

Japanese conglomerate Hitachi Ltd is to halt work on a nuclear power project in the UK and take a one-time charge as negotiations with the British government over funding stalled, the Nikkei has reported.

The company is to book a loss of between ¥200 billion and ¥300 billion yen (US$1.85 billion to US$2.77 billion) after freezing the assets of its British nuclear business and writing down their value, the Nikkei reported without attribution.

Investors applauded signs the company might distance itself from the nuclear power industry — which has been saddled by cost overruns, stiff competition from cheaper fuels and tougher regulations — as well as the Brexit turmoil that has consumed the government of British Prime Minister Theresa May.

“What investors want is increased profit and a lot of synergy to be captured in the near to medium term, and not long-term projects that could escalate and blowout in terms of costs,” Macquarie Group Ltd analyst Damian Thong said.

“If Hitachi was able to guarantee the on time completion of the project and secure attractive financing of the project with the UK government, then perhaps nuclear is possible,” Tokyo-based Thong said.

Hitachi shares yesterday soared 8.63 percent to ¥3,346 in Tokyo.

Hitachi said in response to questions from Bloomberg News that it is reviewing the project and it has not made a final decision.

The Nikkei report said the company’s board would make a decision next week and cited an unidentified executive as saying the project is not being abandoned entirely and could be restarted.

The conglomerate would join the ranks of Japanese companies including Toshiba Corp that are shifting away from the nuclear power sector as project costs balloon and demand shrinks in the wake of the 2011 Fukushima Dai-ichi nuclear power plant disaster.

It also follows Hitachi’s move last month to take over ABB Ltd’s power grid division for about US$6.4 billion as it shifts toward the higher-growth market for electricity networks.

The reported decision also leaves the UK with a dwindling number of potential partners to help fund a revival of its aging nuclear power industry.

A decision over the nation’s marquee £18 billion (US$23 billion) Hinkley Point C project in 2016 was stalled as May’s government reviewed the project, sparking speculation there were concerns over its reliance on the participation of Chinese state-owned companies.

According to the Nikkei report, Hitachi was struggling to find Japanese investors to help fund its project and had approached London for further support.

Those negotiations made no progress, it said.

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