December 20, 2005

China’s $8 bln nuclear deal postponed indefinitely

BEIJING (Reuters) - China will miss a year-end deadline for
handing out an $8 billion contract to build four nuclear
reactors, and plans to postpone its choice indefinitely, an
industry source close to the bidding said on Tuesday.

Pittsburgh-based Westinghouse Electric Co., France's Areva
and Russia's Atomstroiexport are vying for the contract to
build China's first third-generation reactors.

Beijing's original plan was to make a final decision by the
end of this year but officials have decided to put it off
because of the high price of the foreign reactors, the source

Even though China was considering importing only those
parts of the plants that could not be produced domestically,
the prices offered by the bidders were still considered
unreasonably high.

"There will be no new deadline for the decision. When the
government announces the result will depend on how the talks
are going," he added.

During a visit to France earlier this month, Premier Wen
Jiabao indicated Paris would have to improve its offer in terms
of both price and transfer of nuclear technology, the source
said, adding the same message had been passed to other bidders.

"The ball has been kicked to the foreign side again. We
will wait and see how they react," he said.

Industry officials have said both Westinghouse's AP 1000
and Areva's EPR technology are very competitive, while the
Russian offer is less so.

In contrast with the delay in introducing foreign
technology, Beijing is accelerating the construction of nuclear
reactors that use existing domestic technology.

Work began last week on the second phase of the Ling'ao
plant in southern Guangdong province. It will put two
1.0-gigawatt reactors into commercial operation in 2010 and

"These projects have nothing to do with the
third-generation technology and will not be influenced by it,"
the source said.

The energy-guzzling nation plans to invest some 400 billion
yuan ($49.56 billion) in building around 30 new nuclear
reactors by 2020, bringing its total installed nuclear capacity
to 40 gigawatts.

It currently has nine working reactors that supply around
2.3 percent of its electricity, but aims to boost the amount of
power it gets from nuclear plants to 4 percent within 15 years.

($1=8.071 Yuan)