Rosatom to demand compensation from Fennovoima for Hanhikivi cancellation

10 May 2022

Russia’s Rosatom said in a press release distributed on 6 May that the termination of the contract by Finnish company Fennovoima for construction of the Hanhilivi-1 NPP was illegal. Rosatom added that it intends to demand compensation.

Fennovoima announced termination of the contract with Rosatom on 2 May citing serious delays as well as the growing risks associated with the war in Ukraine. Rosatom said it considers the Fennovoima’s decision politically motivated. Fennovoima's PR department told Finnish news service Yle that the company is not commenting on Rosatom's statement. 

Rosatom in its Russian-language Telegram channel said: “The decision of the Fennovoima management to terminate the EPC contract (engineering, procurement and construction) with the RAOS Project company causes us sincere disappointment.” It added: “Such an important step for the project as the initiative of the Fennovoima management to terminate the EPC contract was made without detailed discussion at the level of project shareholders, the largest of which (34%) is RAOS Voima. The reasons for such a decision are absolutely incomprehensible.”

Rosatom said RAOS Project had fulfilled its obligations in good faith, adding: “We reserve the right to defend our interests in accordance with existing contracts and current legislation.” 

Earlier it became known that Fennovoima terminated the contract with Rosatom. Significant delays and the inability of Rosatom to complete the nuclear power plant project are cited as reasons.

Finnish Economic Development Minister Mika Lintilä said Fennovoima’s decision was the right one. He told Yle: “Stopping the project is a completely understandable measure in this situation. Throughout the implementation of the construction, there were significant delays and very serious questions about the functionality.” 

In March, Lintilä told parliament that it was “completely impossible” to issue a permit for the construction of the NPP after Rosatom took control of a nuclear power plant in Ukraine. “My own position is more related to the war in Ukraine and the actions that Russia has taken. It violated all international agreements by seizing the nuclear power plant of another country. I consider it absolutely impossible to issue a licence in such a situation.”

According to Reuters, Rosatom said it has explored options for forging the reactor pressure vessel for Hanhikivi-1 elsewhere than the Kramatorsk plant in Ukraine as originally planned.

The plant was commissioned by Fennovoima, a consortium in which Finnish stakeholders including Outokumpu, Fortum and SSAB own two thirds. Rosatom's subsidiary RAOS Voima holds the rest. The cost of the planned facility was initially set at €7.5 billion ($7.91bn). The chairman of Fennovoima's board Esa Harmala said earlier that the consortium had already spent €600-700 million on the project.

Photo: Rosatom intends to demand compensation from Fennovoima for terminating the contract for delivery of the Hanhikivi 1 nuclear power plant (Credit: Fennovoima)

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