Finnish group scraps nuclear plant deal with Russia’s Rosatom

Finnish-led consortium Fennovoima stated on Monday it has terminated a settlement with Russian group Rosatom to build Finland’s third nuclear energy plant, citing risks linked to the Ukraine war.

“The agreement has been canceled because of delays and the inability to deliver, and we’ve seen that the warfare has accelerated these dangers,” Fennovoima chairman of the board Esa Harmala informed journalists at a press convention.

Rosatom said he was surprised by the announcement.

“The reasons for such a decision are completely incomprehensible,” the group said in a statement, adding that the project had been “progressing” and Fennovoima’s management had not discussed the termination of the contract with shareholders.

Rosatom said it might take the matter to court.

“We reserve the right to defend our interests in accordance with the current contracts and current law”, the firm stated.

The proposed 1,200-megawatt Russian-designed reactor was to be built in Pyhajoki, about 100 kilometers (60 miles) from the port of Oulu in northern Finland.

The Hanhikivi 1 project, in which Rosatom owns a 34-percent stake with the remainder held by a Finnish consortium, had been delayed several times and the construction permit had not yet been granted.

Construction was to have begun in 2023 and electricity production in 2029.

Fennovoima, which had already poured 600-700 million euros into the project, said issues with the delivery had accumulated “years before” and the contract was not terminated solely because of the war.

It was not immediately known whether the Finnish consortium would completely scrap its plans to build a new reactor or seek out a new partner to replace Rosatom.

“It is too early to speculate on the future of the project”, Harmala told reporters.

“This decision does not have a direct impact on the shareholder agreement between the owners of Fennovoima.”

However, Fennovoima chief executive Joachim Specht added it was “too early” to comment on whether Rosatom would stay on as an owner in Fennovoima.

The project, which employed 450 people, had been one of the major industrial projects involving a Russian company in the European Union, though there had been many uncertainties about its future.

Two days before Russia’s invasion of Ukraine, the Finnish government had said it was re-evaluating the security risks for the 7.5-billion-euro deal.

Russian nuclear power groups are currently not subjected to European sanctions over the Ukraine war.

Nevertheless, Fennovoima had said in early April it expected the existing sanctions to have an effect on the project.

Harmala stressed on Monday that “we were not pressured in any way”.

Fennovoima said the decision to cancel the contract was “not made lightly”.

“In such a large project there are significant complexities and decisions are made only after thorough considerations”, it said in a statement.

Finland presently has five nuclear reactors at the flora, each placed at the shorelines of the Baltic Sea, providing approximately 30 percent of us of a’s energy.

The 5th reactor, Olkiluoto 3 constructed by the French-German consortium Areva-Siemens, went online in March and could offer 15 percent of Finland’s electricity whilst it starts producing at complete capacity in September.