April 25, 2024

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[THE INVESTOR] The Korean government on Aug. 1 stressed that its talks to buy Toshiba’s NuGen nuclear project are still ongoing, saying it will make a final decision on the purchase within the year.

“KEPCO (Korea Electric Power Corp.) may have lost its preferred bidder status but there’s nothing changed in the ongoing talks with Toshiba and the UK government,” Moon Shin-hak, nuclear project chief at the Ministry of Industry, Commerce and Energy, told reporters.

“All stakeholder groups in the three countries have agreed to continue talks to achieve their mutual benefits.” 

The NuGen project in Moorside, North West England

His comments come after Toshiba on July 30 announced KEPCO no longer had “priority negotiation rights” over the purchase of its shares in the US$18 billion NuGen project and that it would open door to other investors.

The seemingly breakdown of the talks led to criticism in Korea immediately that the state-run KEPCO’s nuclear technology export could have been seen ironic when the Korean government is busy shutting down its own facilities at home.

But Moon, the nuclear project chief, made it clear that losing preferred bidder status doesn’t necessarily mean the talks have failed all together.

“The talks entered a new phase in June when the UK government decided to change the profit model,” he said.

In December last year, KEPCO was named a preferred bidder for the NuGen project in Moorside, North West England that aims to provide about 7 percent of Britain’s electricity when completed.

Since then, the Korean firm and the UK government had continued talks on the contracts-for-difference or CFD model that is risker for the developer but allows more independence in operating a nuclear power plant, especially on the pricing. But the UK decided to switch to the regulated asset base or RAB model that prioritizes stable electricity supply while limiting some profits of the developer.

Moon hinted it was unavoidable for KEPCO to reconsider deal conditions from the beginning. He added both countries have agreed to carry out a feasibility study on the new model, saying a kick-off meeting among working-level officials was held on July 30.

Industry sources say Toshiba may be still considering KEPCO as the most potent bidder for the stake sale considering its cash flow and technology to handle the mega project. China General Nuclear is said to have participated in the earlier bidding but the UK government seems reluctant to join hands with a Chinese firm for security reasons.

“Toshiba may want to speed up the stalled talks and raise the selling price. Even though KEPCO is no longer a preferred bidder, it will be able to continue talks with the same status,” an industry source told on condition of anonymity. 

The Moorside project was delayed after Toshiba’s nuclear arm Westinghouse went bankrupt last year. As its French joint venture partner Engie also pulled out of the project, the Japanese firm had been searching for new investors.

By Lee Ji-yoon (jylee@heraldcorp.com)