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Released May 10, 2022 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Finland's leading energy company, Fennovoima Oy (Helsinki, Finland), has pulled the plug on the troubled Hanhikivi 1 nuclear power plant project, blaming its Russian supplier Rosatom Corporation (Moscow, Russia) for continued delays.
The company has terminated the engineering, procurement and construction (EPC) contract of plant delivery with RAOS Project--Rosatom's Finnish subsidiary--due to "RAOS Project's significant delays and inability to deliver the project." It stated: "There have been significant and growing delays during the last years. The war in Ukraine has worsened the risks for the project. RAOS has been unable to mitigate any of the risks." Last year, Industrial Info reported that Fennovoima had added an additional year and an extra 1 billion euro (US$1.06 billion) to the price tag for the project. Costs were projected to rise from the original 6.5 billion-7 billion euro (US$6.8 billion-US$7.4 billion) to 7 billion-7.75 billion euro (US$7.4 billion-US$8.2 billion), with commissioning pushed out to 2029. Russia's Rosatom had been contracted from the outset to build the Hanhikivi plant using a 1,200-megawatt (MW) AES-2006 VVER reactor on a fixed-price contract. For additional information, see May 12, 2021, article--Finland's Hanhikivi Nuclear Project Suffers Delays, Price Hike.
"Unfortunately, the termination of the EPC contract is estimated to have a significant employee impact in Fennovoima and is expected to also impact the supply chain companies and Pyhäjoki region," explained Joachim Specht, Fennovoima's chief executive officer. "Our main objective is to support our employees by keeping them informed and work in close cooperation with both our employees and employee representatives. In addition, we focus on preserving the site."
Esa Härmälä, chairman of the board, added: "The decision to terminate the EPC contract with RAOS Project is not made lightly. In such a large project there are significant complexities and decisions are made only after thorough considerations. We fully acknowledge the negative impacts and do our best to mitigate those."
The situation is made more difficult since RAOS Project owns a 34% stake in the project. Rosatom rejected the reasons for termination put forward by Fennovoima.
"We are extremely disappointed that Fennovoima Oy has taken the decision to terminate its EPC contract with RAOS Project," it stated. "We would like to highlight that the initiative from Fennovoima's management to terminate the EPC contract--which is such a major step for the project--was taken without any detailed consultation with the project's shareholders, the largest of which is RAOS Voima (a 100% subsidiary of Rosatom), with a 34% stake. The reasons behind this decision are completely inexplicable to us. The project has been progressing and we had established a good working relationship with our client, which Fennovoima's CEO had repeatedly communicated to shareholders and in the media."
Finland has four reactors in operation that supply roughly 30% of its power. Finland's other key new nuclear project, Olkiluoto 3, has been subject to many delays, cost overruns and legal actions. The project, which was one of the first to opt for the European Pressurized Reactor (EPR), designed by French companies AREVA (Paris, France) and Électricité de France (Paris), has run over by more than a decade and doubled in cost to nearly US$7 billion.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
The company has terminated the engineering, procurement and construction (EPC) contract of plant delivery with RAOS Project--Rosatom's Finnish subsidiary--due to "RAOS Project's significant delays and inability to deliver the project." It stated: "There have been significant and growing delays during the last years. The war in Ukraine has worsened the risks for the project. RAOS has been unable to mitigate any of the risks." Last year, Industrial Info reported that Fennovoima had added an additional year and an extra 1 billion euro (US$1.06 billion) to the price tag for the project. Costs were projected to rise from the original 6.5 billion-7 billion euro (US$6.8 billion-US$7.4 billion) to 7 billion-7.75 billion euro (US$7.4 billion-US$8.2 billion), with commissioning pushed out to 2029. Russia's Rosatom had been contracted from the outset to build the Hanhikivi plant using a 1,200-megawatt (MW) AES-2006 VVER reactor on a fixed-price contract. For additional information, see May 12, 2021, article--Finland's Hanhikivi Nuclear Project Suffers Delays, Price Hike.
"Unfortunately, the termination of the EPC contract is estimated to have a significant employee impact in Fennovoima and is expected to also impact the supply chain companies and Pyhäjoki region," explained Joachim Specht, Fennovoima's chief executive officer. "Our main objective is to support our employees by keeping them informed and work in close cooperation with both our employees and employee representatives. In addition, we focus on preserving the site."
Esa Härmälä, chairman of the board, added: "The decision to terminate the EPC contract with RAOS Project is not made lightly. In such a large project there are significant complexities and decisions are made only after thorough considerations. We fully acknowledge the negative impacts and do our best to mitigate those."
The situation is made more difficult since RAOS Project owns a 34% stake in the project. Rosatom rejected the reasons for termination put forward by Fennovoima.
"We are extremely disappointed that Fennovoima Oy has taken the decision to terminate its EPC contract with RAOS Project," it stated. "We would like to highlight that the initiative from Fennovoima's management to terminate the EPC contract--which is such a major step for the project--was taken without any detailed consultation with the project's shareholders, the largest of which is RAOS Voima (a 100% subsidiary of Rosatom), with a 34% stake. The reasons behind this decision are completely inexplicable to us. The project has been progressing and we had established a good working relationship with our client, which Fennovoima's CEO had repeatedly communicated to shareholders and in the media."
Finland has four reactors in operation that supply roughly 30% of its power. Finland's other key new nuclear project, Olkiluoto 3, has been subject to many delays, cost overruns and legal actions. The project, which was one of the first to opt for the European Pressurized Reactor (EPR), designed by French companies AREVA (Paris, France) and Électricité de France (Paris), has run over by more than a decade and doubled in cost to nearly US$7 billion.
Industrial Info Resources (IIR) is the world's leading provider of market intelligence across the upstream, midstream and downstream energy markets and all other major industrial markets. IIR's Global Market Intelligence Platform (GMI) supports our end-users across their core businesses, and helps them connect trends across multiple markets with access to real, qualified and validated project opportunities. Follow IIR on: LinkedIn.
