Fennovoima cancels Hanhikivi 1 project

3 May 2022

Hanhikivi nuclear project (Photo: Fennovoima)Finland’s Fennovoima has terminated its contract for the delivery of the Hanhikivi 1 nuclear power plant with Rosatom, “due to RAOS Project's significant delays and inability to deliver the project”, a statement said. 

The decision to end the EPC contract for plant delivery with RAOS Project was influenced by the on-going conflict in Ukraine with a Fennovoima statement noting “There have been significant and growing delays during the last years. The war in Ukraine has worsened the risks for the project. RAOS has been unable to mitigate any of the risks. This means, that cooperation with RAOS Project is terminated with immediate effect and both the design and licensing work and works at the Hanhikivi 1 site with RAOS project end.”

Joachim Specht, Fennovoima’s CEO, said: “Unfortunately, the termination of the EPC contract is estimated to have a significant employee impact in Fennovoima and is expected to impact also the supply chain companies and Pyhäjoki region. Our main objective is to support our employees by keeping them informed and work in close cooperation with both our employees and employee representatives. In addition, we focus on preserving the site.”

Esa Härmälä, chairman of the Fennovoima Board said the decision was not made lightly. “In a such a large project there are significant complexities and decisions are made only after thorough considerations. We fully acknowledge the negative impacts and do our best to mitigate those.”

Rosatom said in a statement it would defend its interests in the Hanhikivi 1 construction project. “The decision of the management of Fennovoima Oy to terminate the EPC contract with RAOS Project Oy causes us sincere disappointment. Please note that such an important step for the project as the initiative of the management of Fennovoima Oy to terminate the EPC contract was made without detailed discussion at the level of project shareholders, the largest of which (34%) is RAOS Voima Oy (100% owned by Rosatom).” 

Rosatom added: “The reasons for such a decision are completely incomprehensible. The project is progressing, the teamwork of the customer and the contractor has been established, which was repeatedly reported to the shareholders of the company and in the media by the CEO of Fennovoima. RAOS Project Oy conscientiously fulfils its obligations, the main documents required for the issuance of a license for the construction of a nuclear power plant by the regulator were transferred to the customer last year. More than 98% of them were submitted by the customer to [Finnish regulator] STUK, it was expected that in April/May Fennovoima Oy would complete the transfer of documents to the regulator. Rosatom strictly adheres to the principle of unconditional fulfilment of all obligations in its international activities. We reserve the right to defend our interests in accordance with applicable contracts and applicable law.”

Following the announcement, Härmälä said he was disappointed that the “best and safest nuclear power plant in the world” would not be realised. According to Härmälä, the cost of the entire project is estimated at €7-7.5bn and Fennovoima's costs so far are €600-700mn.

Specht said Fennovoima will start negotiations and the company's staff would be reduced "significantly" by the end of 2022. He added that it was too early to comment on the future of the project in relation to a potential new plant supplier. He said Fennovoima will maintain the construction site with a view to the future, but all cooperation with Rosatom will end immediately.

Photo: Fennovoima has terminated the contract for the delivery of the Hanhikivi 1 nuclear power plant with Rosatom (Credit: Fennovoima)

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