Yahoo Finance Fresh doubt over Moorside power project as Toshiba's nuclear unit Westinghouse files for bankruptcy
The group behind Europe’s largest planned nuclear power plant has filed for bankruptcy protection, throwing further doubt on the £10bn Moorside nuclear project in Cumbria.
Westinghouse, the US nuclear reactor developer owned by Japanese conglomerate Toshiba, has filed for Chapter 11 bankruptcy amid spiralling losses brought about by heavy cost overruns and project delays.
The resulting financial liabilities facing Toshiba have grown to around 1 trillion yen (£7.2bn) for the year to the end of March, up from a previous estimate of £3.5m.
Toshiba confirmed that Westinghouse had obtained $800m bankruptcy financing from a third-party lender to help fund its ongoing commitments. These include engineering work to support operating plants, supplying nuclear fuel, and the decommissioning and decontamination of nuclear waste.
However, the deal makes no clear provision for continued work on the UK's plan to build the giant 3.8GW Moorside nuclear plant in Cumbria, raising fears over the future of the project.
Toshiba is a 60pc shareholder in the NuGeneration consortium that is backing Moorside, alongside France’s Engie, formerly known as GDF Suez. The new plant is slated to use the Westinghouse AP1000 nuclear reactor.
Switching to a new reactor design at Moorside would require the project to go through another time-consuming approval process from the UK’s nuclear regulators, which could take four or five years to complete.
NuGen claimed it was “business as usual” within the consortium and work on the Moorside project was continuing to progress. A spokesman for the group said it could not comment on specific financial issues relating directly to Toshiba or Westinghouse.
Workers’ union GMB has demanded assurances that work on the Cumbrian project will be able to progress.
Chris Jukes, a senior organiser at the union, said: “A collapse of the firm could delay the project or even put its entire future in limbo. This project could bring thousands of jobs to West Cumbria, lead to huge regeneration and infrastructure investment and provide as much as 7pc of the UK's domestic energy needs.
“It is vital that this project is given the certainty it needs and therefore we are calling on an urgent government announcement to give clear and unambiguous clarity for the short, medium and long-term future of Moorside.”
Delays to Moorside would deal a major blow to Government plans to cut carbon emissions by encouraging 16GW of new nuclear investment over the next few decades, as more than two-thirds of the country's power generation capacity is due to retire between 2010 and 2030.
The NuGen venture has been dogged by setbacks since it was formed in 2010. Initially SSE, GDF Suez and Iberdrola were targeting first power in 2023. However SSE withdrew a year later by selling its 25pc stake to the other two partners, before cash-strapped Spanish utility Iberdrola quit in 2013, selling its 50pc stake to Toshiba.
Toshiba acquired Westinghouse in 2006 with much fanfare but said earlier this month it would consider selling a majority stake in the business as part of a wider fire sale of assets after heavy losses in the US business caused the group to miss its own financial reporting deadline for a second time.
Toshiba's chairman has resigned to take responsibility for the company's troubles.
The Japanese conglomerate, which makes products from flash drives to printers and televisions, said it would scale back its overseas operations and shore up its balance sheet by selling off a stake in its prized flash-memory chips business as part of a wider 160bn yen (£1.2bn) divestment drive.
