France’s Areva and Germany’s Siemens have agreed to pay €450m ($553m) to settle their dispute with Finnish utility Teollisuuden Voima (TVO) over delays to the construction of Olkiluoto 3 (OL3), a 1650MWe EPR reactor unit.
The settlement has resolved all disputes out of court while laying down a new cooperative arrangement to complete the plant. OL3 a was scheduled to begin operation in 2010 but faced significant delays and cost overruns. As a result, the consortium of Areva and Siemens and TVO both launched arbitration procedures with the International Chamber of Commerce (ICC). The supplier consortium comprises Areva NP, Areva GmbH and Siemens AG, and Areva SA.
Jarmo Tanhua, TVO president and CEO noted that, when TVO signed the turnkey contract, the cost was set at €3.2bn, but the company now estimates its total investment to be around €5.5bn. The latest schedule expects grid connection in December, followed by regular electricity production in May 2018.
Following the settlement, both parties will withdraw ongoing legal proceedings related to the OL3 EPR project, including ICC arbitration. Areva said the agreement retained the essential aspects of the original contract and also secured all human and financial resources required to complete construction of OL3.
The €450m is to be paid in two instalments, and TVO said it expects to receive the first payment of €328m in March 2018 and the second of €122m on completion of the plant or on 31 December 2019 at the latest. TVO also said that, if OL3 is completed by May 2019, it will pay back up to €150m. However, if that target is not met, there will be additional compensation to be paid of up to €400m to TVO. TVO said the agreement is subject to conditions that are expected to be met during March 2018.
Photo: The Olkiluoto nuclear plant (Credit: TVO)
