AREVA Suffers Hefty Losses from Delays in Finnish EPR Project

Delays plaguing Europe’s first EPR nuclear power plant, the Olkiluoto 3 in Finland, could cost AREVA €2.3 billion, and the French state-owned nuclear engineering firm now says that it will only complete the plant’s construction if the plant’s buyer, Finnish utility Teollisuuden Voima Oyj (TVO), agrees to the company’s hardball proposals.

AREVA revealed in its results for the first half of 2009 that the total cost of the flagship third-generation reactor had risen to some €5.3 billion—up from the originally estimated cost of €3 billion. Costs could go up even more because of timeline uncertainties, AREVA CEO Anne Lauvergeon said in a statement (PDF) last week. The project, originally due to come online in 2009, is already three years behind schedule—consistently plagued with faulty materials and planning problems since construction began in 2005.

Lauvergeon said that the reactor dome was due to be installed shortly, and that final steps will be focused on piping, testing, and commissioning activities. “However, the fact that the client TVO has not yet implemented the specific measures for speeding up the work, which were agreed upon in June 2008, is causing delays and additional costs,” she said.

“AREVA has sent proposals to TVO in order to get back to methods of execution that are in line with usual practices for major projects. We will only commence the final phases of the works when TVO has agreed upon the proposals that have been made or issued contract amendments that provide for the requested modifications.”

AREVA said that TVO would have to fulfill their “contractual commitments”—particularly “respecting the deadlines for processing documents that have been delivered. As an example, AREVA said, TVO took 11 months to process a document it said would have taken two months.

“The specific measures for speeding up the work, agreed upon and jointly announced in June 2008, have for the most part not been implemented by TVO. Furthermore, additional modifications imposed unilaterally by TVO and carried out by AREVA are not backed up by the requisite contract amendments,” AREVA said. “This conduct, which is not in line with standard industry practices for the construction of turnkey power plants, is leading to delays and additional costs.”

TVO said in a published statement that AREVA had not informed it about discontinuing work, nor had it presented any conditions for the continuation of work on the nuclear plant construction site. It maintained that according to the fixed-price turnkey contract, the AREVA-Siemens consortium contracted to construct and commission the unit was responsible for the project.

“We were surprised to read the information Areva released,” said Jarmo Tanhua, TVO president and CEO. “TVO has complied with the plant contract and valid nuclear safety methods and expects also Areva to do so. The schedule for the construction site is challenging and Areva’s public speculation about stopping the works does not make it any easier to keep to it.”

TVO also said that the workforce of more than 4,300 people had continued working during the summer, confirming that the installation phase had now started in some parts of the reactor building.

Sources: AREVA, TVO