Centrica pulls out of new UK nuclear power projects

February 05, 2013 - 5:28:40 am


LONDON: Utility Centrica has pulled out of plans to build new nuclear power stations in Britain with partner EDF, paving the way for Chinese investors to enter the UK market through a partnership with the French firm.

Centrica said it had decided to waive an option of taking a 20 percent stake in four new reactors — two at Hinkley Point in Somerset and two at Sizewell in Suffolk.

Centrica’s decision was largely expected, but it casts some doubt on the UK government’s plan to attract investment to revive the nuclear industry.

“There are multiple factors at play here but the bigger factor is actually the (longer) schedule and the increase in cost, which obviously creates a higher economic challenge for this project,” Centrica Chief Executive Sam Laidlaw told journalists on a conference call yesterday.

China’s CGNPC has already held preliminary talks with French state-owned utility EDF about a partnership in the project, which would be the first Chinese investment in Britain’s nuclear sector. 

In its past experience in building European Pressurised Water reactors in Europe, EDF and its partner on these projects, Areva, have run into huge cost overruns and delays.  

Centrica said it had invested around £200m ($315m) in early development of the project, which it plans to write off as an exceptional cost in 2012 results.

The utility plans within the next year to launch a £500m pound ($787m) share buyback scheme to return value to shareholders, following a £2.2bn rights issue in 2008 to finance the acquisition of a stake in the project with EDF.

Centrica’s withdrawal piles pressure on the government to quickly deliver details on its planned electricity market reform to reassure investors.