EU Commission investigates financing of Olkiluoto nuclear plant

Greenpeace: French state guarantee illegal

Lauri Piekkari

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The European Commission announced on Tuesday that financial arrangements in the ongoing construction of the third nuclear reactor at Olkiluoto in the west of Finland are to be thoroughly examined.
      If the Commission finds that the finances were arranged in a way that distorts competition, there could be financial consequences for the French state-owned company Areva, which is building the installation, as well as for the Finnish buyer TVO.
      Lauri Piekkari, head of finances at TVO, says that he does not believe that the investigation will affect the schedule of the project itself.
     
The issue involves the French state guarantee for a loan of EUR 570 million that TVO took to buy equipment from Areva.
      TVO is an energy producer jointly owned by Finnish industrial companies and power utilities. The third reactor is being built by Areva and Germany’s Siemens.
      The investigation was prompted by a complaint made by Greenpeace and the European Renewable Energies Federation (EREF) in late 2004.
     
The Commission suspects that it is possible that the guarantee may have reduced TVO’s financing costs in a manner that violates EU competition rules.
      The Commission also announced that it was investigating whether or not the financing arrangements have helped Areva/Siemens to win the construction contract.
      State loan guarantees are fairly common in large export deals in this case France wanted to expedite Areva’s deal.
      The guarantee meant that TVO got the loan of EUR 570 million on more generous terms, but according to the Commission, it is paying the French state a fee for the guarantee. The Commission is to investigate the interest on the loan, and the amount of the guarantee fee.
      Greenpeace says that the loan was taken from a German banking group led by BayernLB.
     
Greenpeace, which opposes the use of nuclear energy, filed the complaint because it believes that France’s support violates the EU’s rules on free competition, thereby making nuclear energy an artificially cheaper alternative for those who build it.
      "In a legal sense, the matter is clear to us. The nuclear power plant project does not involve exports, but rather trade within the community", says Mark Johnston of the Greenpeace European unit in Brussels.
      TVO sees the matter differently.
      "It is quite a normal means of financing export deals", says Piekkari of TVO. "This is a financial arrangement based on conditions set by the OECD, which are carefully defined."
      Piekkari also says that the arrangements now being investigated by the Commission have nothing to do with the fact that Areva/Siemens was chosen to build the plant.
      "When the investment decision was made, this whole financial arrangement did not exist. It was done later."
     
Investigations by the Commission on state subsidies generally take from a year and a half to a full year. Piekkari says that a negative decision would not have significant economic consequences for TVO.
      Johnston of Greenpeace expects that such a decision would weaken the profitability of the Olkiluoto project and raise the price of electricity generated by TVO.


Previously in HS International Edition:
  TV programme investigates French mining company prospecting for uranium in Finland (24.10.2006)
  Call for radical electricity market overhaul and sixth nuclear reactor (4.10.2006)
  Sharp rise in support for sixth nuclear reactor in past year (24.4.2006)

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