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CGN to invest in UK critical infrastructure?
Posted on Monday, 09 July 2018 13:51
Reports yesterday that China General Nuclear Power (CGN) wants to acquire a multi-billion-pound stake in a clutch of UK nuclear power stations are likely to bring back memories of concerns voiced over the 2016 Hinkley Point C agreement.

Électricité de France’s (EDF’s) EDF Energy owns and operates 15 reactors at eight generation facilities in the country with a total capacity of 8.9GW, according to the website.

Seven of the stations are advanced gas-cooled reactor sites, including Dungeness B and Hinkley Point B, while the eighth, Sizewell B, is a pressurised water reactor power site designed for a nominal operating life of 25 years.

Centrica has owned a 20.0 per cent interest in Lake Acquisitions, the company in which the nuclear generation assets sit, since 2009 and earlier this year flagged a potential divestment of the financial investment “by the end of 2020”.

According to the Sunday Times, Beijing’s state-run juggernaut has sounded out the possibility of acquiring a 49.0 per cent stake in the business responsible for generating a fifth of the UK’s electricity for GBP 4.00 billion.

With the newspaper reporting CGN is in early talks, the sub-text clearly suggests partner Centrica’s partner EDF would also be offloading a minority stake in the infrastructure projects.

Separately, the Guardian said pension and insurance funds could emerge as bidders in an auction, though it noted suitors would be few and far between as reactors are not a long-term investment.

Paul Dorfman, a senior researcher at University College London’s Energy Institute, told the newspaper it is not beyond the realm of possibility that the government would rubber stamp an inbound deal by CGN.

Furthermore, EDF is struggling with a debt mountain, which it is trying to trim through an asset disposal programme.

Dorfman noted the company is selling off whatever it can as it is worried about its obligations and credit rating, not to mention its waste and decommissioning liabilities.

© Zephus Ltd