US guaranteed $8.3bn of debt for Westinghouse-led reactor project
Government involvement could disrupt Toshiba's revival plans
Westinghouse is under contract to construct two new reactors at the Vogtle nuclear plant in Georgia.
TOKYO — Financing for an American nuclear reactor project overseen by Toshiba unit Westinghouse Electric is guaranteed by the U.S. government, potentially complicating plans for an operational overhaul at the Japanese conglomerate.
Washington guaranteed $8.3 billion in loans to local utilities for the construction of two new reactors at the Vogtle nuclear power plant in the U.S. state of Georgia. Westinghouse has been contracted to build the units.
Construction is targeted for completion in 2020. Around 80% of the guaranteed amount has apparently been put toward purchasing materials and securing labor.
Tighter American nuclear safety regulations enacted following the March 2011 disaster at Tokyo Electric Power Co. Holdings’ Fukushima Daiichi plant in Japan have led to extensive delays at Vogtle. Toshiba is expected to book a charge of more than 700 billion yen ($6.1 billion) for the year ending March 31 in connection with soaring labor and materials costs. To absorb this blow, the Japanese conglomerate and its subsidiary are exploring an overhaul that could include having Westinghouse file for Chapter 11 bankruptcy protection.
If bankruptcy proceedings put the Vogtle project further behind schedule, the utilities’ repayment of the loans could face heavy delays. In that case, the U.S. government — and ultimately American taxpayers — could be forced to take on part of those obligations.
Massive impairment losses on Westinghouse’s nuclear operations, including the Vogtle project, came to light at the end of 2016. Toshiba is expected to announce plans Tuesday to rebuild the nuclear business, alongside earnings for the nine months ended in December. These could include the sale of Westinghouse shares. But the situation could grow more complicated if Washington becomes involved, hindering the parent’s plans to get back on its feet.