March 15, 2010 / 12:00 PM / 10 years ago

UPDATE 2-Areva, TVO trade blame for Finnish reactor delay

* Plant was originally scheduled to start operating in 2009

* Plagued by delays and cost overruns

* Reactor delay has angered French President Nicolas Sarkozy

(Adds Areva comments, background)

By Marie Maitre

OLKILUOTO, Finland, March 15 (Reuters) - The Areva CEPFi.PA Siemens joint venture will complete the delayed OL3 nuclear reactor in Finland in the second half of 2012, three years behind schedule, Finnish utility TVO said on Monday.

But Areva said continued disagreement with TVO to approve key development steps of the project meant the French group had no visibility on the time it would deliver the plant.

The plant, which was originally scheduled to be in operation in 2009, has been plagued by delays and has led Areva to book writedowns of 2.3 billion euros on the project, the first 1,650 megawatt third-generation reactor to be built in Europe.

“June 2012 does not seem possible anymore (for the reactor’s delivery),” TVO’s project manager Jouni Silvennoinen told journalists on the sidelines of a visit at the OL3 site.

Silvennoinen added that the speed of construction had been “relatively good” since the start of summer 2009.

But in an ongoing ping-pong match, Areva’s project head said that the completion of the project depended on TVO.

Areva has blamed OL3 delays on TVO’s “inertia” to validate technical documentation before passing it on to the Finnish nuclear safety authority.

OL3 was a 3-billion euro turn-key project, but Areva has already estimated its loss on the project at 2.3 billion euros.

Areva and Siemens sent in 2009 a one-billion euro compensation claim to TVO, while TVO made a counter claim of 1.4 billion euros.

Asked whether he thought the construction of the reactor would be completed by 2012, Areva’s Jean-Pierre Mouroux said: “I am trying to get as close as possible to this date but I don’t have control over all the different factors.”

A thorny issue was to decide on the approval steps of the upcoming commissioning of the plant, Mouroux said.

The delays in the project have angered French president Nicolas Sarkozy and fuelled rumours that the government, which owns over 90 percent of Areva, could fire Areva’s CEO Anne Lauvergeon, analysts and media reports said.

Delays of the OL3 project have also obscured Areva’s financial visibility, analysts added.

The reactor is Areva’s first third-generation EPR reactor to be built and a show-case to win new projects around the world.

A French consortium led by EDF (EDF.PA) and GDF Suez GSZ.PA, and including Total (TOTF.PA) and Areva, were dealt a blow in December when the United Arab Emirates picked a South Korean group to build four reactors. [ID:nLDE5BQ050] (Writing by Muriel Boselli, editing by Leila Abboud and David Cowell))

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