Hinkley Point delay 'frustrates' Chinese investors
- 29 July 2016
- From the section Business
The government's surprise announcement to delay a final decision on Hinkley Point has left the Chinese company investing in it 'bemused' and "frustrated" according to a source.
French firm EDF, which is financing most of the £18bn project in Somerset, approved its funding at a board meeting on Thursday.
China General Nuclear Power Corporation is contributing a third of the money.
Contracts were due to be signed by all the parties on Friday.
But in a surprise move, the government said it was "only right" to review such a significant project and would make a decision by the autumn.
According to the BBC's Newsnight programme it was security concerns over Chinese ownership of British nuclear power stations that were the primary reason why Prime Minister Theresa May postponed a final decision on the deal until later in the year.
Meanwhile, EDF's UK boss Vincent de Rivaz has written to staff, saying: "The new prime minister has been in post for just 16 days. Her full cabinet has been in post even fewer.
"We can understand their need to take a little time. We fully respect the prime minister's method."
He added: "The very good news is that we are ready. The [EDF] board's decision means that when the government is ready to go ahead, we are ready too."
'No more dithering'
The delay decision has been described as "bewildering and bonkers" by the GMB union national secretary for energy Justin Bowden, who fear it could jeopardise 25,000 jobs.
"After years of procrastination, what is required is decisive action not dithering and more delay," he said.
Both EDF and CGN have reiterated their support for the scheme.
Jean-Bernard Levy, EDF Group chief executive said he remained confident the project would go ahead.
But a source close to CGN has told the BBC that everyone in the company was "bemused" by the sudden nature of the government's announcement and had been given no real insight into the reason for the delay other than being informed it was something the prime minister wanted.
It was also frustrated that the government had allowed speculation about national security concerns to continue.
Nick Timothy, who is a close adviser to Mrs May, has previously raised serious concerns about Chinese investment in areas that could threaten Britain's security.
Last year, the chancellor at the time, George Osborne, said investment in Hinkley Point could lead to the Chinese designing and constructing a new nuclear reactor at Bradwell in Essex.
At the time Mr Timothy wrote on the Conservativehome website that if that happened experts feared China could "build weaknesses into computer systems which will allow them to shut down Britain's energy production at will".
The BBC's industry correspondent, John Moylan said a senior delegation from China had flown in specially to attend the signing and they were now having to return home.
Analysis: Eleanor Garnier, Political Correspondent
Prime Minister Theresa May is stamping her authority on government policy even it it means ruffling the feathers of foreign investors.
The government thinks this project has huge implications not just for energy policy but national security and foreign relations.
Therefore it remains unapologetic about giving it this level of scrutiny.
I have heard Mrs May will not be hurried into any decision. Remember, we have got a new government in Number 10. The business department is being completely restructured.
The last government under David Cameron and George Osborne might have taken a very particular attitude towards the Hinkley project.
Theresa May's government will not be a mirror image of the last government.
As for the timing of that now infamous announcement on Thursday, the PM's team believed it was not for them to say in advance of the EDF board meeting what their thinking was.
The company might have wanted the UK government to make its position clear first but Mrs May was not going to be bounced into that.
What does this look like to potential foreign investors and the question of whether Britain is still open for business?
I am being told we should not over interpret the review - there is a sense of reassurance rather than policy being ripped up to start all over again.
'Radioactive white elephant'
Hinkley Point C is expected to provide 7% of the UK's total electricity requirement.
Mace, which was appointed by EDF to oversee the contract management at the site and provide project and programme management services said: "We need to show that the UK is open for business.
"This decision to delay yet another project of national importance sends completely the wrong signal to investors and the world."
Labour's shadow energy secretary, Barry Gardiner, said there was a role for nuclear power as part of a low carbon future, but the government's handling of the situation had been "absolute chaos".
"At a day's notice they have cancelled the final signing of the agreement that they told the press and everyone they were going to do.
Critics of the plan have warned of environmental damage and potential escalating costs.
Britain has committed to pay a price more than twice the current market levels for the power generated by the plant over 35 years.
Greenpeace executive director John Sauven said: "Theresa May now has a chance to stop this radioactive white elephant in its tracks.
"She should look at the evidence and see that this deal would be a monumental disaster for taxpayers and bill payers.
"The UK needs to invest in safe, reliable renewable power."
During afternoon trading on the Paris stock exchange, EDF's share price was up 6% .
Hinkley Point timeline
Jan 2006 - Government proposes nuclear as part of future energy mix
Mar 2013 - Construction of Hinkley Point approved
Oct 2013 - UK government agrees £92.50 per megawatt-hour will be paid for electricity produced at the Somerset site - around double the current market rate at the time
Oct 2015 - EDF signs investment agreement with China General Nuclear Power Corporation (CGN)
July 2016 - EDF board approves final investment decision, but the UK Government postpones a final decision on the project until autumn.