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Released March 19, 2018 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--French nuclear engineering company AREVA (Paris, France) has agreed to pay 450 million euro ($554 million) in damages to Finland's Teollisuuden Voima Oyj (TVO) (Eurajoki) for delays and cost overruns at the notorious Olkiluoto 3 (OL3) nuclear power project.
The OL3 plant was supposed to herald the arrival of the European Pressurised Reactor (EPR) designed by AREVA and Électricité de France SA (EPA:EDF) (Paris, France) but the project is running more than 10 years late. OL3 was to cost 3.2 billion euro ($3.9 billion) when contracts were signed in 2003, but according to TVO, costs have spiraled to 5.5 billion euro ($6.8 billion). Technical problems and massive cost overruns have led to years of bitter legal action between contractors AREVA and Siemens AG (FWB:SIE) (Munich, Germany) with plant owner, TVO.
According to the deal, which ends all existing legal actions, AREVA has also agreed to pay an additional fine of 400 million euro ($494 million) if it fails to complete the plant by the end of 2019. However, if it completes the project before the deadline, TVO has agreed to return 150 million euro ($185 million) of the damages payment.
"All parties wanted to find an alternative settlement to the arbitration," said Philippe Soulié, chief executive officer of AREVA. "This settlement will allow us all to refocus all our resources and energy towards completion of this new EPR. In less than 18 months, OL3 will deliver 1,650 megawatts (MW) to the Finish electricity grid, with the highest safety standards in the nuclear world and zero CO2. The plant is designed for a 60-year operation lifetime."
Philippe Varin, chairman of the Board of Directors of AREVA, added: "This global settlement of a notoriously difficult project is an essential milestone in the overall restructuring of the French nuclear industry. It provides an optimal environment to allow the AREVA SA-Siemens consortium to complete the OL3 project."
"TVO welcomes the agreement, which ensures that the OL3 EPR project continues to have the necessary financial, technical and human resources for the completion and successful start-up of the plant and also settles other outstanding issues," commented Jarmo Tanhua, president and chief executive officer of TVO. "We very much look forward to working closely with our partners to fully implement this agreement and to promptly accomplish the several crucial project steps leading to the start of regular electricity production of the unit."
Last summer, Industrial Info reported the start of cold functional tests at OL3. Functional hot tests started last month, with the latest commissioning date now set at May 2019. For additional information, see June 21, 2017, article - First EPR Nuclear Project Starts Cold Functional Tests.
The EPR reactor has also run into serious problems at the Flamanville 3 nuclear power project in France. Flamanville 3 was meant to showcase the EPR but the start date has been pushed back repeatedly from its original date of 2012. Costs have also spiraled in that time from an original budget of 3.3 billion euro ($4 billion) to 10.5 billion ($12.9 billion).
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
The OL3 plant was supposed to herald the arrival of the European Pressurised Reactor (EPR) designed by AREVA and Électricité de France SA (EPA:EDF) (Paris, France) but the project is running more than 10 years late. OL3 was to cost 3.2 billion euro ($3.9 billion) when contracts were signed in 2003, but according to TVO, costs have spiraled to 5.5 billion euro ($6.8 billion). Technical problems and massive cost overruns have led to years of bitter legal action between contractors AREVA and Siemens AG (FWB:SIE) (Munich, Germany) with plant owner, TVO.
According to the deal, which ends all existing legal actions, AREVA has also agreed to pay an additional fine of 400 million euro ($494 million) if it fails to complete the plant by the end of 2019. However, if it completes the project before the deadline, TVO has agreed to return 150 million euro ($185 million) of the damages payment.
"All parties wanted to find an alternative settlement to the arbitration," said Philippe Soulié, chief executive officer of AREVA. "This settlement will allow us all to refocus all our resources and energy towards completion of this new EPR. In less than 18 months, OL3 will deliver 1,650 megawatts (MW) to the Finish electricity grid, with the highest safety standards in the nuclear world and zero CO2. The plant is designed for a 60-year operation lifetime."
Philippe Varin, chairman of the Board of Directors of AREVA, added: "This global settlement of a notoriously difficult project is an essential milestone in the overall restructuring of the French nuclear industry. It provides an optimal environment to allow the AREVA SA-Siemens consortium to complete the OL3 project."
"TVO welcomes the agreement, which ensures that the OL3 EPR project continues to have the necessary financial, technical and human resources for the completion and successful start-up of the plant and also settles other outstanding issues," commented Jarmo Tanhua, president and chief executive officer of TVO. "We very much look forward to working closely with our partners to fully implement this agreement and to promptly accomplish the several crucial project steps leading to the start of regular electricity production of the unit."
Last summer, Industrial Info reported the start of cold functional tests at OL3. Functional hot tests started last month, with the latest commissioning date now set at May 2019. For additional information, see June 21, 2017, article - First EPR Nuclear Project Starts Cold Functional Tests.
The EPR reactor has also run into serious problems at the Flamanville 3 nuclear power project in France. Flamanville 3 was meant to showcase the EPR but the start date has been pushed back repeatedly from its original date of 2012. Costs have also spiraled in that time from an original budget of 3.3 billion euro ($4 billion) to 10.5 billion ($12.9 billion).
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
