BY Fraser Tennant
Providing a much needed injection of capital into the beleaguered US nuclear industry, Toshiba Corporation has announced its intention to pay $3.68bn toward the continued building of two nuclear power plants in the US state of Georgia.
The payment, an agreement between the Japanese conglomerate and Georgia Power (a subsidiary of energy provider Southern Company, will allow for the completion of the Vogtle project – two nuclear reactors known as Vogtle Units 3 and 4 that were originally under construction by Toshiba’s nuclear unit Westinghouse Electric Company (WEC) in 2013.
However, the future of the reactors had been thrown in doubt after WEC filed for Chapter 11 bankruptcy in March 2017 following difficulties with a number of key projects that cost the nuclear unit billions. As a result of the bankruptcy, project management of the Vogtle nuclear power plant project was assumed by Georgia Power.
"We are pleased with the positive developments with Toshiba and WEC that allow momentum to continue at the project while we transition project management from WEC to Southern Nuclear and Georgia Power," said Paul Bowers, chairman, president and chief executive of Georgia Power. "We are continuing to work with the project's co-owners to complete our full-scale schedule and cost-to-complete analysis and will work with the Georgia Public Service Commission to determine the best path forward for our customers."
In a statement, Toshiba confirmed that the agreement with Georgia Power would see payments begin in October 2017 and continue to January 2021 when the Vogtle project is scheduled to be completed. Toshiba also confirmed that it had set aside loss reserves for the payment and that this would not have an impact on earnings projections.
Struggling to say afloat financially, Toshiba has also announced its intention to sell a significant stake in its highly-regarded memory chips business – considered to be the crown jewel of its semiconductor business operations – to help cover the billions lost due to the cost overruns overseen by WEC.
Thomas A. Fanning, chairman, president and chief executive of Southern Company, concluded: "We are happy to have Toshiba's cooperation in connection with this agreement which provides a strong foundation for the future of these nuclear power plants.