Westinghouse bags contract to build China N-reactors

After almost two years of negotiations and lobbying, the People's Republic of China's State Nuclear Power Technology Company (SNPTC) eventually selected the Westinghouse/ Shaw Consortium and Westinghouse's AP1000 passive Generation III technology as the basis for four new nuclear power plants to be constructed at the Sanmen and Yangjiang sites in China.

US based Westinghouse Electric Company and its consortium partner, The Shaw Group, Inc. won the order, worth an estimated $8 billion, the biggest international nuclear-power contract, edging out French and Russian rivals, Areva SA and AtomStroyExport, respectively. However, neither side disclosed the value for the reactors, but as per the estimates of outside analysts the total price tag may be $5 billion to $8 billion.

Westinghouse, which was sold to Japan’s Toshiba Corporation by British Nuclear Fuels in October, signed the order in Beijing on the sidelines of a meeting of five major oil importing nations hosted by China, on Dec. 16.

China's Minister for the National Development and Reform Commission (NDRC), Ma Kai and U.S. Energy Secretary Samuel Bodman signed the memorandum of understanding that will lead to the construction of four reactors in China.

After signing the MoU with NDRC, China's powerful energy policymaking body, Mr. Bodman said in a statement that the agreement “represents a major step forward in our relations and will advance our bilateral trade relationship and the energy security of both our nations."

Beijing and Washington were engaged in a clash, recently, over a series of issues ranging from the Chinese currency Yuan to the Chinese bid for Unocal, a US oil company. Now, after entering into a contract with Beijing, US expects the said deal would not only redress the trade relations between the two countries but would also boost their common goal of energy security.

The contract will also help Toshiba, which is already a big player in Japan’s nuclear power industry, and is also Japan's largest chipmaker, cover the $4.16 billion it paid for Westinghouse and the $8.68 billion it plans to invest in its semiconductor unit over three years.

Westinghouse Electric, the world's pioneering nuclear power company which forms the basis for approximately one-half of the world's operating nuclear plants, will construct two units at Sanmen in Zhejiang province and two at Yangjiang in Guangdong.

Westinghouse thanked China's SNPTC for selecting the AP1000, a proposed passively safe pressurized water reactor designed and manufactured by Westinghouse, as the technology basis for building nuclear power plants, and said that this nuclear deal would create or sustain 5,000 well-paying design, engineering and manufacturing jobs throughout the United States.

The news of selection of Westinghouse Electric Co. unit boosted shares of Toshiba Corp. to surge higher. The stock gained 2.5 percent to 789 yen at the 11 a.m. break on the Tokyo Stock Exchange, while the benchmark Nikkei 225 Stock Average advanced 0.3 percent. Toshiba shares are headed for the highest since Sept. 19.

Under the terms of the deal, the Baton Rouge, Louisiana based Shaw Group Inc. will provide engineering, procurement, commissioning, and management services for the four Chinese nuclear generation units.