UPDATE 2-Finland's Kesko drops out of Fennovoima nuclear project

Thu Mar 27, 2014 1:46pm EDT

(Adds Greens, more background)

By Jussi Rosendahl

HELSINKI, March 27 (Reuters) - Finnish retailer Kesko on Thursday said it would drop out of the Fennovoima nuclear consortium, adding to concerns over a project that looks to be heading for a showdown in parliament between members of the ruling coalition.

Kesko, which owned around 2 percent of Fennovoima shares, said it saw increased risks in the consortium's plan to build a 4 to 6 billion euro ($5.5-$8.3 billion) reactor in western Finland.

"The financial, contractual and schedule prerequisites for the project still contain uncertainties, and it (Kesko) estimates that their risks have increased," the company said in a statement.

With Kesko's exit, Finnish ownership in Fennovoima drops below the 50 percent required by parliament. But while chairman Pekka Ottavainen said the announcement came as a surprise, he told Reuters he believed the consortium could find new Finnish investors by the summer.

"We are having discussions with several interested companies," Ottavainen said.

The 1,200-megawatt reactor, Finland's sixth, is aimed at securing cheaper energy for investors including Finnish industrial firms and municipal utilities. But a weak economy and low energy prices have forced some to reconsider their participation.

Germany's E.ON, originally a top investor, left the consortium in 2012 as part of a broader strategic review, followed by some 20 smaller owners.

Russian state-owned nuclear firm Rosatom kept the project alive by supplying the reactor and taking a 34-percent stake.

But the many changes to the original permit approved by the old parliament in 2010 prompted Economy Minister Jan Vapaavuori, part of the new coalition formed in mid-2011, to plan a parliamentary review in the summer.

The Green party has threatened to quit the government if the revised application is approved, on the grounds that it goes against a condition it set when it joined the coalition that no new nuclear permits would be granted.

"Fennovoima's situation has changed so much that effectively we would vote on a new permit," Outi Alanko-Kahiluoto, the chairwoman of the 10 Green members of the parliament, told Reuters.

"I will not speculate on possible outcomes. But we will stick to our prerequisites and make politics one day at a time," she said.

Without the Greens, the government of conservative Jyrki Katainen would only have 102 seats in the 200-strong parliament, which could lead to early elections, analysts said.

"I think Katainen and (finance minister Jutta) Urpilainen would not want to carry on with a very narrow majority," said Kimmo Gronlund, professor of politics in Abo Akademi University. The general election is scheduled for April 2015.

A newspaper poll this week showed that 46 percent of Finns are opposed to Fennovoima's project and 33 percent support it, while the rest are undecided.

The survey by TNS Gallup showed that Finns had gone lukewarm on the plant because of Rosatom's involvement after Russia annexed Ukraine's Crimea peninsula. It also showed the general attitude on building new reactors was 52 percent in favour and 45 percent against, however.

The planned plant in Pyhajoki is estimated to begin operating in 2024 and owners, including steel firms Outokumpu and Rautaruukki, are promised electricity at a price of less than 50 euros per megawatt-hour.

"The investment as such would not have been that significant for us... But we considered that there were so many uncertainties around this project that we didn't want to make the investment," said Arja Talma, a senior vice president of Kesko, declining to elaborate. ($1 = 0.7254 Euros) (Editing by Sakari Suoninen and Sonya Hepinstall)

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Comments (2)
DontBeLate wrote:
Hasn’t Finland heard of Fukushima?

Mar 28, 2014 4:36pm EDT  --  Report as abuse
DontBeLate wrote:
Hasn’t Finland heard of Fukushima?

Mar 28, 2014 4:36pm EDT  --  Report as abuse
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