July 31, 2018 / 1:20 PM / 21 days ago

South Korea's KEPCO loses preferred bidder status for UK nuclear project

LONDON (Reuters) - South Korea’s Korea Electric Power Corp (KEPCO) (015760.KS) has lost its preferred bidder status to buy Toshiba’s (6502.T) NuGen nuclear project in Britain as Toshiba looks at other alternatives, the Japanese company said on Tuesday.

A company logo is seen outside the office of NuGen in Whitehaven, Britain February 13, 2017. REUTERS/Phil Noble

The project in Moorside, northwest England, was expected to provide around 7 percent of Britain’s electricity when built, but has faced setbacks after Toshiba’s nuclear arm Westinghouse went bankrupt last year.

Following the Westinghouse bankruptcy, NuGen joint venture partner Engie (ENGIE.PA) pulled out of the project, which has been estimated to cost between $15 and $20 billion (£11.4 billion and £15.2 billion), leaving the Japanese firm searching for new investors.

KEPCO was chosen as preferred bidder last year but delays in concluding the deal have led to a review of operations at NuGen and of the roles of its 60 direct employees plus around 40 contractors.

While KEPCO is no longer the preferred bidder, Toshiba said it remained in the frame as a possible buyer.

“Toshiba continues to consider additional options including the sale of its shares in NuGen to KEPCO, and we are carefully monitoring the situation, in consultation with stakeholders including the UK government,” a spokesperson for Toshiba said in an email to Reuters.

South Korea’s energy ministry said Toshiba notified it of the withdrawal of preferred bidder status on July 25 so it has opportunities for negotiation with other companies.

However, Toshiba said it understands that an additional review is needed for a new business model and will keep talking to KEPCO as a first priority, the ministry said in a statement.

The ministry added that it, British government officials and KEPCO met in London and they agreed to carry out a joint feasibility study on the project.

Once the study is completed, KEPCO will consult with the South Korean government over the possibility of it taking part in the project, the ministry said.

Britain needs to invest in new capacity to replace ageing coal and nuclear reactors that are due to close in the 2020s, but large new plants have struggled to get off the ground due to high costs and weak electricity prices.

Reporting by Susanna Twidale; additional reporting by Jane Chung in Seoul; writing by Nina Chestney; editing by Kirsten Donovan and Adrian Croft

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