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Hitachi mulls 300 bil. yen loss on halt in UK nuclear project

This undated file photo shows the Hitachi logo. (Getty/Kyodo)

TOKYO (Kyodo) -- Hitachi Ltd. is considering booking a special loss of up to 300 billion yen ($2.8 billion) in the year ending in March, as it plans to suspend a nuclear project in Britain due to swelling costs, sources close to the matter said Friday.

The freezing of the Japanese conglomerate's 3 trillion yen plan to build two reactors on the Isle of Anglesey in Wales would mean that all of the overseas nuclear projects promoted by the Japanese government as part of the country's growth strategy have suffered setbacks.

Its British unit Horizon Nuclear Power Ltd. has yet to halt its preparations for starting construction and Hitachi could make a final decision on the matter at a board meeting to be held as early as Thursday, the sources said.

The initial plan was to have the British government and financial institutions finance 2 trillion yen, and then have the government and each of the British and Japanese private sectors invest 300 billion yen.

But Hitachi has faced difficulties finding investors to finance the construction as its cost has ballooned to 3 trillion yen from the initially estimated 2 trillion yen. Japanese firms including Tokyo Electric Power Company Holdings Inc. and Chubu Electric Power Co. have showed reluctance in investing in the project.

The company, which is expecting to post a group net profit of 400 billion yen in the current fiscal year through March, estimated in July that the loss of withdrawing from the nuclear project would total 270 billion yen.

In December, Hitachi Chairman Hiroaki Nakanishi said the company has told the British government it "can't go any further" with the current construction plan as it does not make economic sense.

Hitachi and the British government aimed to start the reactors' operation by 2025.

The Japanese government has been seeking to export nuclear technology amid difficulties in building new nuclear reactors at home due to safety concerns following the accident at the Fukushima Daiichi nuclear complex triggered by the 2011 earthquake and tsunami.

Mitsubishi Heavy Industries Ltd. is mulling withdrawing from a nuclear project in Turkey amid ballooning safety-related costs following the Fukushima accident, while Toshiba Corp. has decided to exit from nuclear power businesses outside Japan after incurring huge losses in the United States.

Prime Minister Shinzo Abe, who visited London on Thursday, told a press conference that the government awaits the outcome of the ongoing discussions between Hitachi and other stakeholders regarding the Wales nuclear project.

He said that he did not discuss the issue during his talks with British Prime Minister Theresa May, held ahead of the press conference.

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