Partial ruling on Olkiluoto 3

06 July 2012

Finland's Teollisuuden Voima Oyj (TVO) must release €125 million ($155 million) of withheld payments to the Areva-Siemens consortium, an international arbitration court has ruled. A ruling on the delay and cost overruns of the Olkiluoto EPR construction project is still pending.

Olkiluoto 3 - 21 May 2012 (TVO)
While externally Olkiluoto 3 appears almost complete, work continues on installation of the main reactor components and systems (Image: TVO)

In the first half of 2008, TVO submitted a claim to Areva-Siemens for compensation for "losses and costs incurred due to the delay" in completing the construction project. TVO has also rejected a claim presented to it by Areva-Siemens that it had itself caused some delays in the plant's construction. It is this second claim for which the consortium filed a request for arbitration with the International Chamber of Commerce (ICC) in December 2008.

In a partial judgement, the ICC's arbitration court has now ruled that TVO must release €100 million ($124 million) owed to Areva-Siemens, and withheld in contravention of contractual provisions. With accrued interest, TVO will pay a total amount of €125 million, in addition to the legal expenses incurred by the consortium.

TVO said that the payments would now be released to Areva-Siemens and that the amount of interest to be paid is "minor in the context of the value of the project."

The Finnish company also noted that the arbitration process is still incomplete and that the court's decision "takes no position on the delay of the plant unit and the cost resulting from the delay."

At the end of 2003, TVO signed a €3 billion ($3.7 billion) turnkey contract with Areva-Siemens for the construction of the first-of-a-kind EPR nuclear power unit as the third unit at Olkiluoto. Construction started on the plant in May 2005, with completion originally scheduled for 2009. However, the project has suffered several setbacks.

There were significant delays after elevated levels of water in concrete could not be readily explained to the Finnish nuclear safety regulator, Stuk. In addition, some large steel components were re-cast after subcontractors failed to fulfil the high standards demanded of a nuclear project, while Stuk's acceptance of the instrumentation and control system was another major sticking point. Areva also contests that TVO has been much slower than agreed in processing and passing on technical documents to Stuk, despite an agreement to speed this up.

TVO announced in December 2011 that it now anticipates the 1600 MWe plant to begin commercial operation in August 2014, some five years later than originally planned.

In 2009 Siemens decided to abandon its partnership with Areva, prompting Areva to buy out the German company's stake of the reactor business known as Areva NP. In September 2011 Siemens has decided not to re-enter the nuclear part of nuclear power plants but to restrict itself to its previous role as a supplier of conventional, non-nuclear-specific components (such as components and systems like steam turbines, generators and operational I&C) and as a provider of services.

Researched and written
by World Nuclear News

Filed under: Construction, Contracts, Finland