CONSULTING

incur direct and indirect expenses for which the company on the basis of the supply contract has
claimed for compensation. 717
The TVO report states: “According to the schedule updated by the Supplier, regular electricity
production at OL3 will commence at the end of 2018” and:
In July [2015], TVO and the Supplier, Areva Siemens Consortium, updated their claims in the
International Chamber of Commerce (ICC) arbitration proceedings concerning the delay in the OL3
Project. The quantification estimate updated by TVO of its costs and losses is approximately
EUR2.6 billion until December 2018. (...) In February 2016, the Supplier updated its claim in the
arbitration proceedings concerning the delay in the OL3 Project. The Supplier's monetary claim is
now approximately EUR3.52 billion in total.
The latest official cost estimate from early 2014—no doubt an underestimate by now, but it has
not been officially raised since—had been given as €8.5 billion (US$11.6 billion) for an original
“fix price” estimate of “around €3 billion” (US$3.6 billion). It remains unclear who will cover the
additional cost: the vendors and TVO blame each other and are in litigation. AREVA has cumulated
€5.5 billion in losses on the project, increasing provisions by €905 million (US$988 million) in
2015. In February 2016, AREVA updated its claim against TVO to €3.4 billion (US$3.7 billion),
while TVO had increased its own compensation claim against AREVA to €2.6 billion
(US$2.85 billion) in August 2015. 718
In May 2015, credit-rating agency Standard & Poor’s downgraded TVO to BBB-, just one notch
above “junk”, with a negative outlook, “owing to continued deterioration in market prices and
increased risk of higher production costs related to TVO’s third nuclear power plant, Olkiluoto-3”. 719
From the beginning, the OL3 project was plagued with countless management and quality-control
issues. Not only did it prove difficult to carry out concreting and welding to technical
specifications, but the use of sub-contractors and workers from 55 nationalities made
communication and oversight extremely complex (see previous WNISR editions).
The problems produced by the OL3 project have not prevented TVO from filing an application, in
April 2008, for a decision-in-principle to develop “OL4”, a 1.0–1.8 GW reactor to start construction
in 2012 and enter operation “in the late 2010s”. 720 The decision was ratified by the Finnish
Parliament on 1 July 2010. In May 2014, TVO requested a five-year extension on the time allowed
to submit the construction license, with a subsequent revision of the estimated startup of the
reactor to the “latter half of the 2020’s”. 721 The Government refused to grant the extension, and in
May 2015, TVO announced that it had decided not to apply for a construction license during the
validity of the decision-in-principle made in 2010. 722
717 TVO, “Report of the Board of Directors and Financial Statements 2015”, February 2016.
718 NW, “Talks with TVO on Olkiluoto-3 ‘positive’ and ‘fast paced,’ Areva CEO says”, 3 March 2016.
719 S&P, “Finnish Nuclear Power Producer TVO Downgraded T 'BBB-/A3'; Outlook Negative”,
28 May 2015.
720 TVO, “Construction of a Nuclear Power Plant Unit at Olkiluoto—General Description—OL4”,
August 2008.
721 TVO, “TVO applies for an extension to submit construction license application of Olkiluoto 4 plant
unit”, Press Release, 20 May 2014.
722 TVO, “TVO's Board of Directors proposes that OL4 construction license will not be applied now”, Press
Release, 13 May 2015, see http://www.tvo.fi/news/1596, accessed 25 May 2015.
Mycle Schneider, Antony Froggatt et al. 177 World Nuclear Industry Status Report 2016