Nuclear plant building cost rises

This week's news that the cost of the Hinkley Point C nuclear plant, being built with significant Chinese investment in the English county of Somerset, has risen has drawn a mixed response. Some pundits argue that it could send an alarming message to China, but others think it is a positive thing.

On Wednesday, the project's lead investor, French utility company Electricite de France SA, also known as EDF, announced that the cost of building the new plant could be up to 2.9 billion pounds ($3.58 billion) more than initially anticipated, raising the total bill estimate to between 21.5 billion pounds to 22.5 billion pounds.

China General Nuclear Power Corp, or CGN, is investing 6 billion pounds into Hinkley, which had previously been reported to cost 18 billion pounds.

Christopher Bovis, a professor of international business law at the University of Hull, said "The much-anticipated Chinese investment flow to the UK critical infrastructure would be tested from a different prism.

"The project relied heavily on cost control mechanisms and the assurances by the parties to the provision of the infrastructure that they have secured concrete deals with their respective supply chains to ensure cost authentication and price systems which provide early and advanced awareness of movements detrimental to the project," he added.

Although the contractual context between UK and the Hinkley Point C stakeholders appears solid, Bovis said it would not be unthinkable if an enquiry is launched, similar to that related to the HS2 high speed train project. "The outcome of enquiries is unpredictable and provides little comfort to any investor," he said.

The deal between CGN and EDF was signed in October 2015 during President Xi Jinping's State visit to the United Kingdom, and received formal approval from the UK government in September 2016.

Bovis conceded that the reported gap of nearly 3 billion pounds sends the wrong signals to the UK government, adding "not only the credibility of the consortium would be questioned, the appetite for such critical infrastructure projects that face budgetary breaches may diminished."

EDF attributed the cost hike to the challenging ground conditions at the site, and said the new plant will supply 7 percent of the UK's electricity when completed in 2025.

The British government made it clear that customers will not "pay a penny" until the station generates electricity. "Any increase in costs will be borne entirely by EDF and their investment partners and not by consumers or taxpayers," tweeted the UK's Department for Business, Energy and Industrial Strategy.

A source, who works closely with EDF and asked to remain anonymous, said "This project only exceed a small percentage of the budget, which is considered as a manageable amount in relation to the total investment. This will neither impact the Chinese interest in investing in this project, nor affect Sino-UK and Sino-French cooperation in the nuclear sector.

"In fact, it offers a great opportunity to introduce the Chinese experience and skills in delivering such nuclear projects at a large scale," the sourced added.

The source pointed out it is important to introduce successful management experience from China to Britain, including the right technicians, scientist, and project managers, adding "it will be helpful to let the team from three countries to work together remotely on this to solve some of the hardest technical challenges onsite".

Zheng Luyao in London contributed to the story