Bechtel uncertainty mars BNFL's bid for $6bn China contract

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The Independent Online

British Nuclear Fuels' $6bn (£3.14bn) bid to build four new nuclear power stations in China has beenhit by uncertaintyafter it emerged that its construction partner has yet to sign up and funding of the project had proved controversial in the United States.

British Nuclear Fuels' $6bn (£3.14bn) bid to build four new nuclear power stations in China has beenhit by uncertaintyafter it emerged that its construction partner has yet to sign up and funding of the project had proved controversial in the United States.

Bechtel, the US engineering giant, which is highly regarded for work on major international infrastructure projects, was heavily involved in the bid's preparation. However, it is understood that the San Francisco-based company could not agree terms with BNFL and the other consortium member, Mitsubishi Heavy Industry, in time to submit the bid this week. BNFL is thought to be confident that it will win some work from the Chinese authorities, who are going ahead with these four stations as part of a highly ambitious programme to build 30 nuclear stations by 2020 - each costing up to $2bn.

BNFL's Westinghouse US subsidiary is leading the bid and has said that success would lead to the creation of jobs in the US, not in the UK.

The deal would be worth £1.5bn to Westinghouse. It is up against competition from France's Areva, the world's biggest reactor builder, and Russia's AtomStroyExport. Westinghouse, which was bought by BNFL in 1999, last month secured $5bn of funding for the project from the US government's Export-Import Bank. However, it is now apparent that the financing is controversial in the US because Westinghouse is British-owned.

Peter A Bradford, a former member of the US Nuclear Regulatory Commission, said: "If the risk were not falling on the Ex-Im bank, it would be falling on the British Government." It also quoted Congressman Dennis J Kucinich, an Ohio Democrat, saying: "The bank is funded by US tax dollars; they should be supporting US companies. I'm not against US jobs, but shouldn't we be for US companies?"

Critics claim that although US jobs would be created if Westinghouse is successful, the numbers involved are small compared to the amount of financing required. Some also worry that the project would lead to the export of technology to China. The package offered by the Export-Import Bank is three times bigger than any previous loan it has agreed.

A spokesman for Bechtel said it had decided it was "not prudent to join at this time", but added that it might yet become part of the consortium.

Bechtel, one of the largest engineering and project management companies in the world, with close ties to the White House, is understood to have held back because it wanted to spend more time doing due diligence. The bid has been made on a fixed price basis, placing the risk of potentially heavy cost over-runs on to the bidder.

Westinghouse said its bid had been put forward using advice provided by Bechtel, but confirmed the company was "not a member of the consortium at this time". It added: "The bid we have put forward is very strong regardless of Bechtel's participation."

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