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Toshiba asks financial firms to help with UK nuclear project cost: sources

[TOKYO] Toshiba Corp is asking Japanese financial institutions to help fund a nuclear project in northwest England, sources with direct knowledge of the matter said, as the conglomerate looks for ways to ease financial burdens after a US$1.3 billion accounting scandal.

Toshiba holds a 60 per cent stake in the NuGen UK nuclear joint venture with France's Engie, and plans to provide three of its Westinghouse AP1000 reactors for the Moorside project to be built near the Sellafield nuclear site in west Cumbria.

While financing plans have yet to be formally drawn up, the scandal has made it more difficult for Toshiba to take on its planned share of the building costs by itself, the sources said, adding that they estimate its share of those costs at more than US$2 billion.

Tapping domestic financial institutions for help in funding an overseas nuclear project is a rare move for a Japanese nuclear company, underscoring the financial impact of the scandal.

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In overseas nuclear reactor projects, it is common for the main company in charge to foot around 10 per cent of the total cost, which it usually does either on its own or in partnership with other nuclear power firms. "It has become difficult for Toshiba to do this on its own,"said one of the sources. The sources said the conglomerate had made requests to insurers and as well as some banks. They declined to be identified as they were not authorised to speak to the media on the matter.

A Toshiba spokeswoman declined to comment. NuGen officials were not immediately available for comment.

Toshiba has not formally announced cost projections for the 3.4 gigawatt Moorside project that is part of Britain's plan to replace its ageing fleet of nuclear reactors and polluting coal plants.

Company sources have previously said that until two years ago Toshiba had estimated a total cost of 1.5 trillion yen (S$1.73 billion). But industry analysts now believe the cost could be roughly double that due to higher-than-expected labour costs and stricter safety standards.

Financing plans for the project are not due to be finalised until 2018. The first of the three reactors is slated to begin operations in 2024.

Toshiba's stock has fallen about 40 per cent since news of accounting woes began to emerge. Japan's securities watchdog on Monday recommended Toshiba be fined a record 7.37 billion yen for overstating profits. It is also being sued by shareholders over damages brought about by stock losses.