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Toshiba nuclear unit Westinghouse files for bankruptcy protection

29 March 2017

Toshiba's Westinghouse Electric (WE) US nuclear division, which was set to provide the reactors for a new power plant in the UK, has filed for bankruptcy protection from creditors. The Japanese group, part of the joint venture behind the Moorside power station project in Cumbria, admitted the financial crisis at WE left the supply of its technology "uncertain", although Toshiba said it remained committed to the project. 

An artist's impression of the planned Moorside plant. Image: NuGen
An artist's impression of the planned Moorside plant. Image: NuGen

The doubts are a result of a crisis at the group, which faces a growing bill from a WE project that is beset by project delays, cost over-runs and allegations of accounting fraud. On March 29, Toshiba estimated WE liabilities at almost $10bn as of December - saying that it expected its net loss for the current financial year to the end of March could top 1tn yen ($9bn). Moreover Toshiba says it expects a £5 billion write-down because some of its US nuclear assets were worth far less than estimated.

"Since December 2016, WE and Toshiba have been working to determine the scale of the possible loss, investigate the causes and to implement preventive measures and actions," the company said.

Westinghouse announced a 'strategic restructuring' and has secured $800 million in debtor-in-possession financing to fund operations.

Toshiba first alerted investors to the financial difficulties earlier in the year and tried to sell its majority stake in Westinghouse. However no buyer has been found. Westinghouse is said to bring in about one-third of the industrial giant's revenue.

Westinghouse's interim President and CEO, José Emeterio Gutiérrez, said: “We are focused on developing a plan of reorganization to emerge from Chapter 11 as a stronger company while continuing to be a global nuclear technology leader.”

The proposed Moorside nuclear power plant is planned for a site adjacent to the decommissioned Sellafield plant in West Cumbria. With a 3.4 gigawatt (GW) net output capacity, it would become the UK's biggest nuclear power station, delivering enough electricity to power approximately six million homes.

The troubles at WE sparked renewed calls in the UK for Government assurances over Moorside - with Labour demanding the ministers underwrite Toshiba's investment to safeguard the project and its potential for 20,000 new jobs.

Chris Jukes of trade union GMB made an urgent appeal regarding the future of Moorside, saying: “This project could bring thousands of jobs to West Cumbria, lead to huge regeneration and infrastructure investment and provide as much as seven per cent of the UK's domestic energy needs. It is vital that this project is given the certainty it needs."

The joint venture for the Sellafield plant told Sky News it remained "business as usual".

"NuGen is continuing to develop its Moorside Project to deliver three Westinghouse AP1000 reactors in West Cumbria. NuGen will continue to work alongside our technology supplier, Westinghouse, and our shareholders, Toshiba and Engie, in taking forward the Moorside development phase."

Toshiba was more cautious in its response.

It said: "The Chapter 11 filings have made planned supply of the AP1000 (nuclear power plant) for the UK project uncertain, and we have therefore recorded an impairment loss covering the cost of the NuGen project."

It added: "Toshiba is committed to invest until the FID (final investment decision), but there is a certain point before the FID where we can review and determine whether or not to continue the project."

A Department for Business, Energy & Industrial Strategy spokesperson said: "The UK Government is committed to new nuclear as an important part of our energy mix, having commissioned the first new nuclear power station in a generation at Hinkley Point C.

"The UK is one of the most attractive countries to invest in new nuclear and we engage regularly with the developers of proposed new nuclear projects."

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