Setback for Finnish Plan to Build Russian-Designed Reactor

Finland's plans to build a Russian-designed nuclear reactor faltered on Wednesday when Finnish utility Fortum voiced doubt about taking a stake vital to win Helsinki's approval for the $6.71 billion project.

Parliament has approved the plan to build a 1,200-megawatt (MW) reactor supplied by Russia's state-owned Rosatom, provided that Finnish or European Union investors own at least 60 percent of it. Rosatom has 34 percent.

Fortum agreed last December to take a 15 percent stake in the project, helping to reach the 60 percent threshold, but on Wednesday said it was not certain about taking the stake as its talks with Russian partners had stalled.

"The negotiations have not ... come to a conclusion that would make it possible for Fortum to decide on its participation in the Fennovoima nuclear power project," Fortum said in a statement.

Fennovoima has to submit an application to build the new reactor by June 30, and the government said the deadline will not be extended. "Ensuring (Fennovoima's) domestic ownership is an issue of significant national interest," Economic Affairs Minister Olli Rehn said in a statement.

Fennovoima, whose shareholders including steel firms Outokumpu and Rautaruukki, said it was confident of meeting the ownership requirements but declined to elaborate on how this would be achieved.

"We will submit an application for a construction permit by next Tuesday," Fennovoima spokeswoman Elina Seppa said.

The company said earlier in June that it was talking to other potential EU investors.

The planned facility in Pyhajoki is targeted to begin operating in 2024 with the prospect of generating electricity at a price of less than 50 euros per megawatt-hour.

Fennovoima's plans first unravelled in 2012 when its top investor, Germany's E.ON, left the project followed by some others, including Finnish retailer Kesko.

Rosatom threw Fennovoima a lifeline the following year when it agreed to take a 34 percent stake. But Finns have turned lukewarm on Russian investments as tensions with Moscow grew over its annexation of Ukraine's Crimea peninsula.

Falling Nordic power prices and a protracted economic downturn in Finland also made some investors reconsider their participation.

Potential delays could be another risk. Another Finnish power company, TVO, whose shareholders include paper producers UPM-Kymmene and Stora Enso, confirmed on Wednesday it had cancelled plans to build the Olkiluoto-4 reactor, blaming the slow progress in constructing Olkiluoto-3.

Finland wants more nuclear power to reduce its dependence on power imports, which are needed to meet peak demand.   


By Anna Ercanbrack and Nerijus Adomaitis