UK approves Chinese-backed nuclear plant,
sets tighter controls
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[September 15, 2016]
By William James
LONDON (Reuters) - Britain gave the
go-ahead on Thursday for a $24 billion nuclear power plant, ending weeks
of uncertainty that strained ties with China and France but also
signaling a more cautious approach to foreign investment in critical
infrastructure projects.
The government of new Prime Minister Theresa May said it would proceed
with the Hinkley Point C project in southwest England, approving French
utility firm EDF's plan to build Britain's first new nuclear reactor in
decades, backed by $8 billion of Chinese cash
It also set out a new investment policy designed to give it greater
control over future deals when foreign states were involved in buying
stakes in "critical infrastructure".
May, who became prime minister after the Brexit vote, stunned investors
by putting the nuclear project on hold in July - just hours before a
contract was due to be signed - saying she needed time to assess all
aspects of the project including national security concerns.
"Having thoroughly reviewed the proposal for Hinkley Point C, we will
introduce a series of measures to enhance security and will ensure
Hinkley cannot change hands without the government's agreement," Greg
Clark, business minister, said in a statement.
"Consequently, we have decided to proceed with the first new nuclear
power station for a generation."
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The government said it would be able to stop the sale of EDF's
controlling stake before or after completion of the project, under the
new safeguards. EDF said it had agreed with the government to retain
control of the project.
EDF, China General Nuclear Power Corporation (CGN) - the project's
state-backed Chinese investor - and business lobby groups welcomed the
decision to proceed.
"We are very happy the British government has approved the project," CGN
said in a statement, adding that the company could now work with EDF as
planned to provide Britain with a safe, reliable, sustainable source of
low carbon energy.
May's decision in July to review the project came little more than a
month after Britons voted to leave the EU in a referendum that forced
the resignation of Prime Minister David Cameron - whose administration
gave the initial go-ahead to the plan.
The Brexit vote, and the resulting economic uncertainty, cast doubt on
the future of major British infrastructure projects. It also threw a
spotlight on Britain's trade relations with China and other big
economies outside Europe.
The two new reactors at Hinkley Point, in southwest England, would
provide around 7 percent of Britain's electricity, helping to fill a
supply gap as the country's coal plants are set to close by 2025.
Britain has committed to pay a minimum price for the power generated by
the plant for 35 years. Critics of the deal had expected the government
to try to renegotiate the price, which they say was set too high before
oil prices fell, dragging energy costs lower.
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![](../images/091516pics/news_u39.jpg)
Hinkley Point C nuclear power station site is seen near Bridgwater
in Britain, September 14, 2016. REUTERS/Stefan Wermuth
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But the statement on Thursday said the price had not changed for the
energy.
INVESTMENT POLICY
The decision to go ahead with Hinkley goes some way to easing
concerns that May, a former interior minister, was closing the door
to foreign investment, particularly from China which has plans to
invest billions in British infrastructure.
According to a former colleague, ex-business minister Vince Cable,
May had expressed concern at the "gung-ho" attitude that Cameron
took towards courting Chinese investment.
Addressing those concerns, the government said it would take a
"special share" in all future nuclear new construction projects to
ensure that significant stakes cannot be sold without its consent.
CGN plans to make a number of investments in British nuclear power
including the building and operating of a new nuclear power station
with EDF at Bradwell-on-Sea in Essex, southeast England. Bradwell
would be a Chinese-led project, using Chinese reactor technology.
"This is not out of kilter with the way that things go on in other
major economies around the world," said Martin Young, Managing
Director at RBC Capital Markets. "It's more of a safety net, a
backstop, than anything else."
CGN said it was not concerned by the new ownership rules and planned
to move ahead with the Bradwell project and another minority
investment in the development of a new power station at Sizewell, in
eastern England.
Horizon, a nuclear new build group in Britain owned by Japan's
Hitachi's, said it was "entirely comfortable" with the new approach.
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China's Foreign Ministry did not immediately respond to a request
for comment. China began a three-day national holiday on Thursday.
(This story removes extraneous words from 14th paragraph.)
(Additional reporting by Kate Holton, Karolin Schaps, Ben Blanchard
in Beijing, Richard Lough in Paris, writing by Elizabeth Piper and
William James,; Editing by Pravin Char)
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