By Daniel Dombey in Istanbul, Jonathan Soble
May 2 2013
Japan is set to build its first overseas nuclear power station since the Fukushima disaster two years ago, with prime minister Shinzo Abe due to sign an agreement with Recep Tayyip Erdogan, his Turkish counterpart.
However, a Japanese official said that despite Turkey’s decision to award a Japanese-led consortium exclusive negotiating rights for the $20bn-plus tender, there was still “a long way to go” regarding financial terms. France would also have a central role in the prospective deal.
Speaking ahead of Mr Abe’s visit to Turkey where he was expected to arrive on Thursday night, Mr Erdogan told Japan’s Nikkei newspaper: “The Japanese will build it. Japan has experience and knowhow in dealing with earthquakes.”
A deal to build Turkey’s second nuclear plant would be economically and symbolically significant for Japan. Many experts have questioned whether Tokyo can effectively market its technology overseas given the blow to its safety reputation. It would also be a boost for France’s nuclear industry.
Two people familiar with the talks said Turkey would take a 50 per cent stake in the 4,500-plus megawatt facility at the Black Sea site of Sinop. Mitsubishi Heavy Industries is set to take 30 per cent of the consortium with GDF Suez, which would operate the plant, taking the remaining 20 per cent, according to a person on the French side. The technology for the four reactors would be supplied by French company Areva.
Analysts said the structure of the deal marked a concession from Turkey, which had refused to issue treasury guarantees for nuclear projects for three decades. Ankara depicted its decision to take a stake as a sign of confidence in nuclear power in Turkey.
“We want to be in the project,” a Turkish official said. “That is our preference.”
“This is a roundabout way of providing guarantees,” said Naz Masraff, an analyst at Eurasia, a risk consultancy. She added that while Russia, which has already won the tender to build Turkey’s first nuclear plant on the Mediterranean coast, and China were both willing to absorb all the risk to establish themselves as nuclear exporters, “it was not realistic to expect the Turkish government to expect any other country to accept those kind of terms”.
However, the official said the government would pay less for electricity from Sinop than from the Russian-built plant, adding that a final deal would take a couple of months to conclude. Some analysts argue that an agreement would take considerably longer to finalise.
Groups from China, South Korea and Canada had all previously declared their interest in the Sinop project, with Canada and South Korea dropping out of the competition and Turkish officials privately expressing their preference for a Japanese rather than a Chinese-led consortium on technical terms.
Friday’s scheduled announcement will not be the first time a Japanese consortium has won exclusive negotiating rights for Sinop. A bid headed by Toshiba collapsed after its partner Tokyo Electric Power, which owns the tsunami-hit Fukushima Daiichi plant, withdrew from the consortium following the accident.
The deal would also be the first involving a French company since Fukushima – and since GDF Suez’s French rival EDF was beaten to a tender for nuclear reactors in Abu Dhabi in 2009, when it lost out to South Korea, at the time a new entrant in the sector.
In addition, it would be the first new nuclear sale for Areva since 2007, welcome news for a French government desperate for a boost to its big nuclear industry in the wake of Fukushima and the subsequent decision by Germany to abandon nuclear power.
It also comes in the wake of the improvement of Turkish-French ties under President François Hollande, who has partially lifted a block on Turkey’s membership talks with the EU that had been imposed by his predecessor, Nicolas Sarkozy.