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U.K. offers Hitachi ¥2 trillion loan to prop up costly nuclear power project in Wales

Kyodo

The U.K. government is offering ¥2 trillion ($18 billion) in loans and other funding to cover a major portion of Hitachi Ltd.’s project to build nuclear reactors in Wales, a source close to the matter said Thursday.

The proposal is aimed at easing concerns about the swelling costs, which have ballooned to ¥3 trillion. The maker of machinery and infrastructure systems could reach a decision this week on whether to go ahead with the project, the source said.

If it decides to continue, Hitachi is prepared to exchange a document that would serve as a basic agreement with the U.K. government.

But observers have questioned whether the U.K. government would be able to implement the ¥2 trillion proposal, as some members of the parliament are opposed to extending excessive financial support to the nuclear project.

Hitachi had applied for a site license to build two advanced boiling water reactors on the Isle of Anglesey in Wales, to be overseen by its U.K. nuclear unit Horizon Nuclear Power Ltd. It aims to start operations in the first half of the 2020s.

Concerned about the construction costs, Hitachi Chairman Hiroaki Nakanishi made a personal request for support to U.K. Prime Minister Theresa May on May 3.

Hitachi has signaled that should talks over the British government’s funding proposal prove difficult, it may withdraw from the project. The total cost has swelled because of extra expenditures on safety measures.

Hitachi acquired Horizon Nuclear Power in 2012 because it aimed to expand its nuclear power business abroad amid dimming prospects for new reactor demand in Japan in light of the 2011 Fukushima crisis.

Progress on Hitachi’s overseas nuclear project is a success for Prime Minister Shinzo Abe’s goal of exporting Japan’s nuclear power technology to drive economic growth at a time when other nuclear projects abroad tied with Japanese companies have been struggling.

Among Hitachi’s rivals, industrial conglomerate Toshiba Corp. has also pulled out of overseas nuclear operations after incurring huge losses in its atomic business in the United States.

A nuclear power project in Turkey pursued by Mitsubishi Heavy Industries Ltd. has also hit a snag because of a surge in safety-related costs.