Asia assesses effects of Westinghouse bankruptcy

3 April 2017

China's State Power Investment Corp (SPIC) said Westinghouse's bankruptcy filing would not have a "substantial impact" on China’s nuclear plans and the two sides would ensure a key AP1000 reactor project would be completed on schedule this year, Reuters reported on 30 March. Two AP1000 reactors are under construction at the Sanmen NPP in Zhejiang province and two more at the Haiyang NPP Shandong province. According to the recently-published 13th Five-Year Plan China aimed to have all four AP1000 units in operation by the end of 2017.

"The two sides were fully aware of the importance of the Chinese AP1000 project and agreed to continue to make the project a common priority and increase investment to ensure that the target of putting the reactor into operation this year is met," SPIC said in a statement 30 March. The first AP1000 was due to be completed in 2014, but construction was subject to delays as a result of design problems as well as a nationwide review of the nuclear industry following the Fukushima disaster in 2011.

Westinghouse had hoped the AP1000 would become the centrepiece of China's ambitious nuclear strategy, and expected to win new projects. However the company underestimated China's ability to develop its own third-generation designs, with the Hualong 1 reactor now selected over the AP1000 for a number of domestic nuclear projects.

“The restructuring application by Westinghouse will not have a substantial impact on third generation reactor work such as the construction of the AP1000, the subsequent construction of a batch of CAP1000 reactors or the CAP1400 demonstration project,” SPIC said.

As to plans for building AP1000s in India, there appear to be conflicting views. The Indian government on 30 March told the Rajya Sabha (upper house of parliament) that Toshiba will go ahead with the to build a NPP in Andhra Pradesh despite Westinghouse filing for bankruptcy. "Through informal sources, we have been informed that the Toshiba will not back out and will go ahead," Minister of State in­charge of Atomic Energy Jitendra Singh said.

He was responding to questions on the status of the six-unit 7,200MWe plant planned for Kovvada. However, he added: "But as far as official channels are concerned, we have not received any denial or any reluctance on the part of the US companies to carry forward this project." He said the first unit was expected to be set up within five years.

Japan’s Nikkei Asian Review, on the other hand, said the project was “under threat partly due to developments in Japan, including the financial crisis facing Toshiba”. The Westinghouse bankruptcy filing means the USA and India will miss a June deadline for finalising the contract for Westinghouse, the paper noted. There is also uncertainty over whether the Japanese Diet (parliament), will ratify a separate nuclear deal with India, signed last year. The agreement, which is essential to any nuclear construction in India involving Japanese companies, remains controversial in Japan, as it is the first such accord with a country that is not party to the 1970 Nuclear Non-proliferation Treaty.

Until it went bankrupt, Westinghouse was in the lead to clinch the first Indian reactor contract under the 2008 US-India deal, the Nikkei pointed out. However, Toshiba is abandoning its lead role in projects to build commercial nuclear plants in India and the UK. “By exiting from the overseas nuclear power construction business, Toshiba intends to focus on maintaining existing reactors and developing new plant designs”, the paper added. “The paradox is that the promise of the US-India nuclear deal contributed to Toshiba's agreement to the overpriced $5.4bn acquisition of Westinghouse from Britain's BNFL in 2006. That purchase turned out to be a huge blunder, saddling Toshiba with cumulative losses that have now put its own 140-year existence in serious jeopardy.” 

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