Fennovoima, Rosatom seek compensation for Hanhikivi

22 August 2022

Fennovoima and Rosatom have initiated proceedings against each other to claim compensation for damages arising from the termination of the planned Hanhikivi 1 nuclear power plant project at Pyhäjoki in northern Finland. Fennovoima said its claims currently total almost EUR2 billion (USD2 billion), while Rosatom said it is seeking USD3 billion from Fennovoima.

A rendering of how the Hanhikivi 1 plant could have looked (Image: Fennovoima)

Fennovoima signed the plant supply contract for Hanhikivi with Rusatom Overseas - Rosatom's nuclear power plant exports subsidiary - in December 2013. Rosatom offered to build a plant using a 1200 MWe AES-2006 VVER under a fixed-price contract. The Hanhikivi project is owned by Fennovoima, majority owned (66%) by Voimaosakeyhtiö SF, a Finnish company with shareholders including major Finnish corporations and several local energy companies. The remaining 34% is held by RAOS Voima Oy, the Finnish subsidiary set up in 2014 by Rosatom for the purpose of buying a share in the company.

However, on 2 May this year Fennovoima announced its decision to terminate the engineering, procurement and construction (EPC) contract "due to RAOS Project's significant delays and inability to deliver the project." On 24 May it withdrew its construction licence application for the planned plant.

On 6 May, RAOS Project said it had "no other choice but to defend ourselves and demand compensation" for the "unlawful termination" of the Hanhikivi 1 project. It added that it is ready to discuss "possible options for the project to recommence when conditions permit".

Fennovoima has now "initiated several arbitrations and other proceedings against various Rosatom entities to claim compensation for damages arising out of the delays and inability to deliver the project and related issues."

According to Helsingin Sanomat, there are a number of controversial issues, the central one being the advance payment of EUR800 million that Fennovoima made to RAOS Project, which it wants returned.

Fennovoima CEO Joachim Specht told the Finnish newspaper in a 20 August interview that Rosatom warned the company at the beginning of the year about possible new delays. "They indicated the risk of several years of delay. It was included in their project plans. That was one of the reasons why we had to stop the project."

Specht said he did not know how long the compensation proceedings would take. "It is difficult to estimate the duration of the processing, but of course it is not over in a year. It takes several years."

Meanwhile, Rosatom said it has so far filed six lawsuits totaling USD3 billion. "The specifics of these lawsuits are confidential and not subject to disclosure," it said.

Researched and written by World Nuclear News