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French auditors slam Areva for Olkiluoto nuclear project in Finland

The French nuclear contractor Areva is at the centre of a storm of criticism by French government auditors over its operations. Finland’s Radiation and Nuclear Safety Authority STUK says it still hasn’t received all of the new paperwork relating to nuclear safety for the long-delayed Olkiluoto 3 nuclear power plant currently at a standstill in western Finland. And the company remains locked in a cycle of recrimination with the plant's owner.

Olkiluoto 3 -reaktorin asennustöitä heinäkuussa 2014.
Installation work taking place at the Olkiluoto 3 reactor at Eurajoki in February 2014. Image: Yle

A 122-page report by French government auditors has not yet been officially published but the financial paper Les Échos has quoted liberally from the account, which details major fiascos, billion-euro losses and the dissemination of misleading information by the French nuclear power plant contractor Areva.

The progress of the Olkiluoto 3 nuclear reactor in Eurajoki western Finland forms a central part of the narrative. Areva was selected in 2003 -- as part of the Franco-German joint venture Areva-Siemens -- to deliver the Finnish nuclear reactor.

“Areva was ready to do anything to win the Olkiluoto deal, including downplaying project management deficiencies. They had also previously delivered and commissioned nuclear reactors but they had never undertaken an entire project end-to-end, since the main French contractor had always been the EDF Group (Électricité de France), explained Les Échos editor in chief Pascal Pogam in an interview with Yle’s A-Studio current affairs program.

Based on accounts by parties such as the Olkiluoto owner-operator, the Finnish power consortium Teollisuuden Voima or TVO, Areva is said to have lied about the possibility of constructing a nuclear reactor within the agreed schedule.

“During the time of the Olkiluoto agreement Areva and Siemens (Areva’s former German joint venture nuclear partner) assured TVO that they had the required expertise to see the enterprise through to the end. On hindsight, TVO has speculated that Siemens and Areva minimised their difficulties and covered up their shortcomings to get the deal,” Pogam continued.

Bottomless pit of financial losses

However the Olkiluoto reactor turned out to be a bottomless pit of financial losses for Areva, with the project languishing seven years behind schedule and racking up nearly 3.5 billion euros in deficits for the French contractor.

French government auditors took Areva to task for its inability to accurately estimate the cost and timetable required to complete the project.

“It’s difficult to blame Areva alone, which is now locked in a futile dialogue with TVO and STUK. The parties can no longer communicate. The future of the project remains wide open because there seems to be no solution to the dispute. Currently Areva and TVO are only communicating via their lawyers. That’s not helping and no one can say when the project will be completed or at what cost,” Pogam remarked.

“According to the report the uncertain situation could get out of hand and the final bill could be massive. However I wouldn’t blame Areva entirely, it’s more a question of each side holding the other to ransom in a situation where each is equally to blame,” Pogam added.

Escalating arbitration battle

For the last couple of years Areva and TVO have been engaged in a pitched arbitration battle before the International Chamber of Commerce, with each side ratcheting up compensation claims over construction delays and unpaid fees.

In late October last year, Areva slapped an additional 700 million euros to bring its claim to 2.6 billion euros for the voided nuclear reactor deal. In its turn, TVO has claimed 1.8 billion euros in compensation for construction delays.

Meanwhile according to the most optimistic estimates the reactor is expected to be ready for firing up at the beginning of next year – many years behind the original completion schedule of 2009. However TVO has said Olkiluoto 3 won’t be operational until one year later in 2016 – and it’s anybody’s guess what the final price tag will be.

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