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Hinkley nuclear project – too big, too financially risky – a problem for both French and British tax-payers?

Guardian 3rd July 2017, The timing of EDF’s “clarifications” is a shock. It is very early in the life of this £18.1bn (now £19.6bn, possibly rising to £20.3bn) project to be recasting the numbers.

The tricky stages of construction, like pouring the right mix of concrete, lie ahead. The additional costs
relate to mundane matters, such as “a better understanding” of UK regulators’ requirements and “the volume and sequencing of work on site”. These are planning areas in which EDF would surely have made
allowances for uncertainties. That all that slack, and more, has been used up is puzzling. Sceptics within EDF who argued that Hinkley is too big and too financially risky will feel vindicated already.

EDF’s projected rate of return on the project was never high at 9%; now it is down to 8.5% and will fall to 8.2% if the delays materialise. Still, it’s a French problem, right? Didn’t the UK government insulate us by making EDF and
its Chinese co-financier shoulder the construction risks? Wasn’t that the trade-off for the UK guaranteeing to buy all Hinkley’s electricity for 35 years at twice the current wholesale price?

Well, yes, that’s how the contract is structured, and EDF’s UK boss was full of reassurance on
Monday that UK taxpayers remain protected. But no contract of this size is ever so straightforward, as the National Audit Office pointed out in its blistering report last week.


July 7, 2017 - Posted by | general

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