French firm Engie backs out of Moorside nuclear plant venture

James Sillars, Business Reporter

Crisis-hit Toshiba is being forced to buy out a French firm's stake in the venture behind a proposed new nuclear power station in Cumbria - throwing its future into further doubt.

Engie, a utility company, had a 40% holding in NuGen - the vehicle led by Toshiba to create the Moorside plant.

But it said on Tuesday that it had exercised a right to sell its interest to Toshiba for $138.5m (£111.2m) because the Japanese firm's nuclear power business, Westinghouse - due to supply the three reactors to Moorside - filed for bankruptcy protection in the US last week.

The financial troubles at Westinghouse - a result of project delays, cost over-runs and allegations of accounting fraud.- have added to a slew of costs for Toshiba as a whole.

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It was revealed last Wednesday that the problems could result in the parent firm reporting annual losses for the current financial year of over 1tn yen (£7.2bn).

Engie's exit from NuGen means Toshiba is now the only company behind the Moorside venture.

It has said that while it is seeking new investors for the estimated £15bn project, it may consider selling out altogether.

The Government has been urged by Labour to underwrite Toshiba's investment to safeguard the project and its promise of 20,000 new jobs.

Greg Clark, Secretary of State for business, energy and industrial strategy (BEIS) is in South Korea as part of efforts to secure fresh investment.

It has been reported that Kepco - a state-owned energy firm - is still in talks with NuGen having confirmed potential interest a month ago.

NuGen said it "has been working tirelessly to bring in additional investment to support the Moorside project".

However, the departure of Engie means it would now be easier for Toshiba to seek a sale of NuGen as it scrambles for cash to prop up its battered balance sheet.

The French firm said in a statement: "NuGen... is facing some significant challenges which have led Engie to exercise its contractual rights in view of transferring its 40% shares to Toshiba.

"Engie, as operator of an important European nuclear fleet, remains willing to put its know-how and expertise at the service of NuGen and help any restructuring with new potential partners for the development, construction and
operation of the project."

A BEIS spokesperson said: "The UK Government is committed to new nuclear as an important part of our energy mix, having commissioned the first new nuclear power plant in a generation at Hinkley Point C.

"The NuGen consortium has always planned to bring in other partners to deliver the project and we engage regularly with a range of developers and investors.

"The Secretary of State is currently in South Korea for talks on future collaboration between our two countries, including on potential civil nuclear projects."

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