Toshiba is set to liquidate UK nuclear arm NuGen, according to people familiar with the company, dealing a hammer blow to plans to build a new plant at Moorside in Cumbria.
The Japanese conglomerate, whose board is meeting on Thursday, is almost certain to take the decision to wind up NuGen after all avenues to sell the unit were exhausted.
“It is 80 per cent likely that Toshiba will decide at the board meeting to wind it up,” a source close to NuGen told the Financial Times.
“There were a number of options being explored [to sell NuGen], none of which have come to fruition or could now come to fruition,” the source added.
The decision to liquidate NuGen is likely to be confirmed in the early hours of the morning, UK time, once the Toshiba board has met, the person said, though he cautioned that the conglomerate might delay the decision to a later date.
A spokesperson for Toshiba in the UK was not immediately able to respond to a request for comment.
The collapse of NuGen would deliver a blow to the government’s ambition for using new nuclear to replace energy capacity that will be lost as coal-fired power stations close down in the coming years to meet ambitious carbon-reduction targets.
Ministers have been dogged by questions about their nuclear programme with widespread criticism of the price agreed for electricity from EDF’s planned Hinkley Point plant in Somerset.
Greg Clark, business secretary, has suggested that the government would be open to taking a more direct stake in either Wylfa — a separate Hitachi-owned site in Anglesey — or Moorside to help get them off the ground.
The timing of the announcement is awkward for Mr Clark, who is currently in Japan on a business trip designed to reassure executives about the impact of Brexit on the UK economy.
One senior government figure said there were still hopes that the site could be salvaged under new ownership but said he was “not optimistic” about its future.
One industry figure described the NuGen decision as “another casualty of Brexit”. Theresa May had promised to help the owners then failed to deliver any concrete plan, he claimed.
Toshiba had been trying to sell NuGen to Korea Electric Power Corp (Kepco), but the talks ran into difficulty after the UK announced in June that it was considering how the funding for new nuclear power plants should be structured.
One model under review is for private investors to secure a return on a nuclear plant’s so-called regulated asset base (Rab).
In July, Toshiba said it was exploring alternative options for the business and had terminated Kepco’s preferred bidder status, though discussions between Kepco, Toshiba and the governments of the UK and Korea as to what exactly a Rab model might entail remained ongoing.
In September, the Financial Times reported that Toshiba had also entered talks with Brookfield, the Canadian asset manager, to potentially buy NuGen; Brookfield had previously bought Toshiba’s US nuclear business Westinghouse after it filed for Chapter 11 bankruptcy. Toshiba announced the same month it was terminating all jobs at NuGen not directly related to the sale process.
Massive writedowns on Toshiba’s US nuclear business — revealed in December 2016 — plunged the group deep into negative shareholder equity and jeopardised its listing on the Tokyo Stock Exchange.
The likely failure of the Moorside plant would deal a blow to the UK government’s plans to encourage the construction of new reactors to replace its ageing fleet.
In August a spokesperson for the UK’s Department for Business, Energy and Industrial Strategy said the government had “repeatedly engaged with Kepco and the government of the Republic of Korea both in Korea and the UK in support of ongoing Moorside negotiations”, but said it was ultimately a commercial matter between the two sides.
Sue Ferns, senior deputy general secretary at the union Prospect, said the long-term future of the nuclear industry and its supply chain in the North West could be on the line without Moorside.
“If Toshiba opts to pull the plug on this project then the government must step in. Our analysis shows that if the government were to take a 50 per cent stake then there would be a net benefit to the public purse so there really is no excuse not to.”
The planned liquidation of NuGen was first reported by Nikkei Asian Review.
Additional reporting by David Sheppard
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