After Japan's Toshiba Corp confirmed on 8 November that it intended to cancel plans to build the Moorside NPP in the UK, South Korea indicated that it was still interested in the project, Reuters reported. The Moorside project Cumbria faced difficulties after Toshiba's nuclear arm, US-based Westinghouse went bankrupt in March 2017.
Toshiba’s UK subsidiary, NuGen, said in a statement: "Whilst NuGen will not be taking the project forward, the Moorside site in Cumbria remains a site designated by government for nuclear new build. It is now for the Nuclear Decommissioning Authority as the owner of the site and the government to determine its future."
NuGen, set up in 2009 as the UK joint venture between Toshiba and France's Engie, had planned to build a 3.8 GWe NPP at the Moorside site using AP1000 nuclear reactor technology provided by Westinghouse. The AP1000 completed the UK regulatory generic design assessment (GDA) process in March 2017.
In July 2017, Toshiba became the sole owner of NuGen, after Engie exercised its right to require the Japanese conglomerate to purchase its stake, following the Westinghouse bankruptcy. The following December, Toshiba announced that Korea Electric Power Company (Kepco) had been selected as the preferred bidder for NuGen, but last August Kepco lost that status after negotiations continued without any conclusion. Toshiba said it would however continue to negotiate with Kepco, along with other companies, to acquire NuGen.
Toshiba said on 8 November, following a board meeting, that, "notwithstanding negotiations with multiple companies", it was unable to anticipate being able to complete the sale of NuGen during FY2018 (ending 31 March 2019). After considering the additional costs entailed in continuing to operate NuGen, Toshiba recognises that the economically rational decision is to withdraw from the UK nuclear power plant construction project and has resolved to take steps to wind up NuGen."
Advance Energy UK Limited (AEUL), the special purpose company established to hold its shares in NuGen, will also be liquidated. Toshiba said it will start the winding-up process by 31 January and will follow all UK legal procedures required to bring it to completion. As a result, Toshiba expects to record a consolidated loss before tax of about JPY15 billion ($132 million). Toshiba also expects to record a loss on the valuation of stocks of subsidiaries and affiliates related to AEUL of about JPY3.8 billion. This will be eliminated from the consolidated financial statements and there will be no change in consolidated business results, Toshiba said. NuGen has capital stock worth GBP381,870,010, according to notes included in Toshiba's statement. NuGen recorded a net loss of JPY5.38 billion in FY2015, JPY6.91 billion FY2016 and JPY10.23 billion FY2017, respectively.
In September, in anticipation of Toshiba’s decision, NuGen announced it was reducing its team at Moorside from more than 100 to fewer than 40. NuGen said it has retained a team to support the implementation of the winding-up process and will work with Toshiba and its other stakeholders. As well as its discussions with Kepco, Toshiba also held talks on the Moorside project with Canada's Brookfield Asset Management, which has taken over Westinghouse, but these also came to nothing.
However, South Korea's Ministry of Trade, Industry and Energy said in a statement that it would continue discussions with the UK government. "The ministry plans to closely coordinate with the British government on the Moorside project while monitoring the NuGen liquidation process with Kepco," it said on 8 November. Kepco had said it wanted to use its own APR1400 nuclear reactor design for the project, rather than the Westinghouse AP1000, However, unlike the AP1000, the APR1400 has not undergone the UK GDA process, which means construction would be delayed by several years.
UK trades unions Unite and GMB called on the government to take action to help save the Moorside project which NuGen said would create tens of thousands of direct and indirect jobs in the local area. GMB, which represents energy sector workers, said it has long argued that the government should take a stake in the financing of the project rather than leaving it at the mercy of foreign companies.
"While the government has engaged regularly with the companies involved, this is entirely a commercial decision for Toshiba," a spokesperson for the Department of Business, Energy and Industrial Strategy (BEIS) said. “We understand that Toshiba have faced a difficult decision in ending their involvement in new nuclear projects outside of Japan in light of their well-known financial challenges.”
The government has been criticised over the costs of new nuclear plants, in particular Hinkley Point C in southwest England, being built by France's EDF along with China General Nuclear Power Corp, which is due to come online in 2025. However, in an attempt to keep the costs down, it has recently said it would consider investing directly into the Wylfa Newydd plant in Wales to be built by Japan's Hitachi Ltd.
In September NuGen boss Tom Samson said he was in favour of using the regulated asset base (RAB) model to fund the “transformational” Moorside project. This is essentially a contract drawn up with government backing which calculates the costs and profits of a project before it is started, and allocates an investor’s profits from the beginning. A government regulator sets a fixed number, the RAB, which attempts to account for all the future costs involved in the completion of a project. The regulator then also sets a fixed rate of return for the investors based on those costs.
Toshiba’s Moorside decision was part of a five-year business reform plan to revamp its operations, with thousands of global job cuts. The company plans to cut about 7,000 jobs globally over the next five years, Toshiba Chairman and CEO Nobuaki Kurumatani said at a news conference in Tokyo. Toshiba said most of the planned workforce cutbacks will come through “natural attrition,” as its employees are largely age 50 and above. The company has been revamping its operations following an accounting fraud scandal that came to light in 2015 followed by Westinghouse bankruptcy two years later.
