TOKYO -- Hitachi Ltd. is set to freeze its plan to build a nuclear power plant in Britain after failing to gain investments from Japanese private companies and additional financial assistance from the British government, those knowledgeable about the project said.
The Tokyo-based electronics giant will make a final decision on the matter at a board meeting as early as next week. As a result, the company is estimated to post a loss of up to 300 billion yen in the business year ending March 2019.
Hitachi bought a British nuclear power company in 2012 and planned to build a nuclear plant consisting of two reactors on Anglesey Island in central Britain. The company aimed to start operations at the plant in the mid-2020s.
However, the total cost of the project surged to nearly 3 trillion yen, far above the initial estimate, because of an increase in the expenses of safety measures at the plant. Hitachi expected the British government to extend over 2 trillion yen in loans to help cover the increased costs while the Japanese government and private sectors and their British counterparts would foot 300 billion yen each. Hitachi intended to shoulder the remaining 300 billion yen.
However, Hitachi struggled to secure investors from among Japanese companies largely because it is difficult to see if the project would be profitable.
Hitachi Chairman Hiroaki Nakanishi told a news conference in December 2018 that, "We've told the British government we can no longer continue the project."
The company has so far spent some 300 billion yen on construction-related costs, including personnel expenses.
Since there are no longer any prospects that the project can be continued, the company will report the costs as losses in the current business year ending this coming March.
Even though Hitachi will keep an option to resume the project, the company will highly likely discontinue it since there are no prospects that the firm can gather more funds such as additional financial assistance from the British government.
Meanwhile, in a separate development, the government and Mitsubishi Heavy Industries Ltd. are expected to call off their construction of an advanced atomic power station in Turkey also because of snowballing safety expenses.
If Hitachi calls off its project in Britain, it will prove that the export of nuclear power plants, which the government of Prime Minister Shinzo Abe has promoted as the pillar of its infrastructure export strategy, has failed.
(Japanese original by Ryo Yanagisawa, Business News Department)