Poland Moves Ahead With $60 Billion Nuclear Power Project

(Bloomberg) -- After at least a decade of preparations, coal-reliant Poland may be one step away from embarking on its biggest power project ever, with talks on securing the $60 billion in financing entering the final stretch.

• The country is seeking a foreign investor for a 49% stake in the company that will be responsible for building and operating six reactors, Piotr Naimski, a top government official in charge of strategic energy infrastructure, said on Monday. The scale of the project may be a burden for PGE SA, Poland’s largest power utility, whose shares dropped.

Key Insights

• The new cabinet seems to be speeding up the pace of negotiations on the project after the ruling party maintained its majority in the lower house of parliament in the Oct. 13 elections and shuffled the government.
• Naimski expects the financing to be agreed next year for the first reactor to be completed in 2033. Poland is aiming to generate as much as 9 gigawatts of nuclear power by 2043 to slash emissions and meet the European Union’s climate goals.

• The majority stake in the investment vehicle, poised to be set up over the next few months, will be held by state-controlled companies, potentially including PGE. Investors would have to commit for the entire lifespan of the power plant.
• Naimski declined to name potential investors, but indicated that the negotiations also revolve around government guarantees, “without which none of nuclear projects around the world would be built.” The government said earlier it was in talks with U.S. companies.
• According to David Durham, president for plant solutions at Westinghouse Electric Co. LLC, one of the companies that could supply technology, the construction may take five to six years, while the project’s investment timeline presented by the government is still achievable. “But there’s a lot to be done,” he said on Monday.

Share impact

• PGE and other potential investors in the nuclear project, including PKN Orlen SA, see their shares declining whenever the risk of investment in the nuclear plant returns as the level of spending and the price for the technology seem excessive.
• PGE slumped 2.5% in Warsaw, the worst-performing stock on WIG20 Index. Orlen, which earlier denied it’s interested in the investment, slid 0.9%.

To contact the reporter on this story: Maciej Martewicz in Warsaw at mmartewicz@bloomberg.net

To contact the editors responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net, Piotr Bujnicki, Andras Gergely

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