Here's my summary of the article about Hitachi's headaches with the Wylfa project, described in the article from Japanese business magazine Diamond, which was posted by @shintak400
Hitachi is struggling to find investors in the Wylfa project being undertaken by its Horizon unit, to cover the 1 trillion yen not covered by the British government's 2 million yen loan.
There are questions over the project's profitability as the total cost has mushroomed due to safety measures and the purchase price of the power generated is likely to be capped.
Hitachi is negotiating with the governments of UK & Japan and companies in both countries.
Hitachi is negotiating with the governments of UK & Japan and companies in both countries.
Hitachi aims to take Horizon off its balance sheet by reducing its holding in the unit to less than 50%.
Hitachi has shared its concerns with the J-govt, but no mechanism in Japanese law allowing govt to participate. The J-govt ould do something if Hitachi committed more, but then Hitachi can’t take Horizon off its balance sheet.
Caution is increasingly being voiced within Hitachi over the nuclear development plan, especially among outside directors, warning of need to judge projects on economic viability, rather than being swayed by J-govt’s policy of pursuing nuclear tech exports.
There are worries about governance implications if Hitachi ignores these cautionary voices from board and forges ahead with construction regardless.
The final decision is to be made in 2019. Hitachi would lose 270 billion yen if it pulled out, but more if it delayed further.
The final decision is to be made in 2019. Hitachi would lose 270 billion yen if it pulled out, but more if it delayed further.
Failure to make a decision will push the share price down, so a swift decision is preferable.
But recording the Welsh project as an extraordinary loss would eat up the majority of the surplus in earnings forecast for the period and eliminate Hitachi's current prospects of meeting its mid term targets for the 1st time in 3 years.
The article mentions the political problems experienced by the British government over Chinese involvement in other nuclear projects in the UK.
Hitachi will continue to seek investors for the Wylfa project, but without some kind of cunning manoeuvre (the article uses the term “ウルトラC”), such as enhanced J-govt support, it will be difficult to bring the Wylfa Newydd plan to fruition. /ends
