Nuclear energy powerhouse Westinghouse Electric Co. filed for Chapter 11 bankruptcy on 29 March, with its parent company Toshiba writing off more than $6 billion in losses connected to its US businesses. Westinghouse was engaged in negotiations to build six AP1000 nuclear reactors in India as part of the landmark US-India civilian nuclear agreement. The bankruptcy filing raises fresh questions, not just about the fate of the reactors, but also about the future of the nuclear deal.
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The landmark nuclear deal – signed by Obama’s predecessor, George W Bush, with India – is also under pressure. Indeed, there is a distinct possibility that the deal could turn out to be a dud on the energy front. The Toshiba-owned Westinghouse’s bankruptcy has derailed US-Indian plans to finalise the first contract under the deal. India has earmarked at least one nuclear park each for Westinghouse, GE-Hitachi and France’s state-owned Areva. Each of these firms were to build a cluster of reactors at their assigned park. Westinghouse’s massive losses have left Toshiba tottering on the brink of collapse. Toshiba has already decided to exit from overseas nuclear power construction business. The paradox is that the promise of the India-US nuclear deal contributed to Toshiba’s overpriced $5.4 billion acquisition of Westinghouse in 2006, yet that purchase turned out to be a huge blunder.
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Meanwhile, the US-India deal’s prospects have been further dimmed by the financial troubles of the other two leading reactor vendors, Areva and GE-Hitachi. Like Toshiba, Areva’s very survival is at stake today. It needs at least a €5 billion bailout from the French government to stay afloat. Such a rescue package has to await the outcome of the French presidential election. Areva is likely to be split, with its reactor unit being sold to EDF, which is also state-owned. As for GE-Hitachi, it has already trimmed down its nuclear operations by recognising their economic risks.
Daily O 8th April 2017 read more »