Wed, Sep 29, 2004 page11

• China looks overseas for nuclear construction firm

  EXPERTISE To help increase the proportion of nuclear power used in China to 4 percent by 2020, officials will likely give one contract to a foreign construction firm

  • BLOOMBERG
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  China may award an US$8 billion order for four nuclear reactors to an overseas supplier such as Areva SA, Westinghouse Electric Co or Siemens AG as part of the world's biggest nuclear-power construction program, a Chinese nuclear-power official said.

  A single foreign bidder may be chosen to build the four reactors, with work starting by 2007, said Yu Jianfeng, a director at China National Nuclear Corp, which operates the nation's reactors. China Nuclear and affiliate Guangdong Nuclear Power Co plan to build a further four reactors to supplement the 11 already operating or under construction in China, he said.

  "It's an ambitious project for us," Yu said in an interview in Sydney at the World Energy Congress earlier this month. "We can't finish the project on our own. We need help with expertise."

  The expansion of nuclear power in China and other Asian nations such as India may revive an industry that's slumped in North America and Western Europe. The US hasn't built a reactor since the failure of a unit at Three Mile Island, Pennsylvania, in 1979, while a fire at the Chernobyl reactor in the former Soviet Union in 1986 heightened safety concerns in Western Europe.

  China needs to add two reactors a year to meet a target of generating 4 percent of its power from nuclear plants by 2020, Yu said. Currently, nuclear power provides 1.7 percent of China's electricity needs.

  Of the 27 units under construction worldwide, 16 are located in India, Japan, South Korea, Taiwan and China, according to the International Atomic Energy Agency's Web site. Twenty-two of the 31 reactors planned worldwide are in East and South Asia.

  "Asia-wide, it would appear that strong demand for new power generation capacity in future will expand opportunities for foreign suppliers in the nuclear-power sector, an area that has been largely dormant for a decade or so," said Simon Dodd, Hong Kong-based Asia Pacific head of project finance at Banca Intesa SpA, Italy's largest lender by assets.

  The eight planned Chinese reactors will be built in Guangdong and Jiangsu provinces, Yu said. National Nuclear and Guangdong Nuclear may start construction of the first four as early as October next year, he said.

  China, the world's second-largest energy consumer after the US, aims to more than double total power generation capacity to about 900,000 megawatts by 2020 from the current 400,000 to alleviate shortages caused by the country's economic growth.

  Power shortages caused blackouts in cities including Shanghai and Beijing this year and affected 24 of the nation's 27 provinces.

  Within two months, China will for the first time invite bids from foreign companies to partake in the nuclear power projects, National Development and Reform Commission Vice Chairman Zhang Guobao said on Sept. 6.

  The eight new reactors, each able to generate 1,000 megawatts, are part of the government's plan to increase nuclear capacity fivefold by 2020 to 36,000 megawatts -- enough to meet peak demand for California. It costs as much as US$4 billion for a pair of 1,000 megawatt reactors, Yu said.

  Westinghouse, a Monroeville, Pennsylvania-based unit of British Nuclear Fuels Plc, Munich-based Siemens and Paris-based Areva, is among the companies that plan to bid for contracts to build the additional capacity, China National Nuclear's Yu said.

  Siemens and Areva will make a joint bid, said Nicole Dellero, a deputy director at Areva's corporate strategy department.

  Paris-based Framatome ANP Inc, a joint venture between Siemens and Areva, has supplied China with four reactors and employs about 3,000 people in the country. The company is the world's biggest maker of nuclear reactors.

  Seoul-based Korea Hydro and Nuclear Power Co will also bid, said Yoon Yong-woo, a member of the company's overseas project team.
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