Finnish city seeks to sell stake in Hanhikivi project

Tuesday, 29 March 2022

The Hanhikivi project is owned by Fennovoima. The company is majority owned (66%) by Voimaosakeyhtiö SF, a Finnish company with shareholders including major Finnish corporations and several local energy companies.

The city government of Vantaa on Monday announced it had instructed Vantaan Energia to seek to exit Fennovoima's Hanhikivi 1 project, saying the situation in Ukraine makes it "unlikely" that a construction permit for the project will be granted, based on public governmental statements and ongoing sanctions and security against Russia.

"If this is the case, the Government must resolve the matter as soon as possible and prevent the inappropriate use of public funds for the project," the municipality said.

Vantaan Energia has invested EUR39.6 million (USD44.2 million) in the project to date, and with a total liability of up to EUR90 million, so its unilateral withdrawal from the project would only be possible by selling its shares in Voimaosakeyhtiö.

At present there is no realistic market for the company's shares, the city said, although an exit could also take place by a unanimous decision of Fennovoima's shareholders to terminate the construction project or through national and international regulations or sanctions, it added.

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, in which a 34% stake 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.

Fennovoima submitted its construction licence application to Finland's Ministry of Employment and the Economy for the Hanhikivi plant in June 2015, with an updated version submitted in April 2021. In January, Fennovoima said that licensing work had progressed "to the homestretch", with the final licensing materials expected to be submitted to the nuclear regulator over the next couple of months.

In December, Fennovoima submitted the first building permit application for a nuclear power plant to the Pyhäjoki municipality's building control authority office. The construction licence verifies that the facility can be built according to Finnish nuclear safety requirements, while the building permit verifies that each building fulfills Finnish building and construction requirements.

In 2021, earthworks started in the main pit that will be continued during 2022 as part of preparations for the construction phase of the power plant, which was expected to begin in the summer of 2023.

However, last month, following the Russian military attack on Ukraine, Finland’s Minister for Economic Affairs Mika Lintila told the country’s parliament that he would not be granting a building permit for the Hanhikivi nuclear plant as things stand.

Fennovoima said on March 15: "Several restrictive measures have been set by the international community. The nuclear sector has not been included into these packages, although discussions are ongoing. However, the current decided sanctions are expected to impact the Hanhikivi 1 project.

"Fennovoima considers the situation to be challenging. Nonetheless, Fennovoima has commitments and contracts with project stakeholders including Fennovoima’s own employees. Fennovoima’s duties and legal obligations remain unchanged until there are changes to this framework through sanctions or binding decisions by the relevant authorities.

"For the time being, we carefully follow the developments of the situation. We acknowledge that the dramatic situation generates discussion both in the political and the public space. Fennovoima is in close contact with all relevant stakeholders.

"We are very sad about the developments and the situation in Ukraine. There are a lot of people close to our employees in the area impacted by the invasion and our thoughts are with them."

* This article was updated after publication to make clear that the updated construction licence was submitted in April 2021.