Bloomberg News

French Nuclear Watchdog Says Orders Won at Too-Low Prices

June 06, 2012

Nuclear-reactor makers are offering prices too low to cover costs to win orders abroad in a strategy that puts earnings at risk, the head of the industry’s watchdog in France said.

“Export contracts for nuclear plants are being obtained at pure dumping-level prices,” Andre-Claude Lacoste, head of the Autorite de Surete Nucleaire regulator, said today at a conference organized by L’Usine Nouvelle magazine in Paris.

“Prices accepted by vendors and obtained by buyers are unsustainable,” Lacoste said. “There aren’t many tenders, which is why competitors are ripping each other off. It’s already a serious matter, and we need to make sure that there’s no dumping on safety on top of that.”

Areva SA (AREVA), the world’s largest provider of nuclear equipment and services, has booked more than 2.8 billion euros ($3.5 billion) of costs since 2005 because of delays and cost overruns at an atomic plant it’s building in Finland. The Paris-based company and General Electric Co. (GE:US) were beaten in 2009 on a four- reactor order in the United Arab Emirates by Korea Electric Power Corp. (KEP:US) in the Seoul-based company’s first export contract.

“We’re not doing dumping” on prices, Tarik Choho, vice- chief commercial officer at Areva, said in an interview at the conference. “We may be making errors on estimates when we’re doing something for the first time abroad, and we can be surprised by reactions of the nuclear regulator or the supply chain.”

Areva is preparing bids or in talks to sell reactors in countries including China, India, the U.K., the Czech Republic and Poland. In Finland, Areva faces GE Hitachi Nuclear Energy, Korea Hydro & Nuclear Power Co., Mitsubishi Heavy Industries Ltd. (7011) and Toshiba Corp. (6502) in a tender next year.

To contact the reporter on this story: Francois de Beaupuy in Paris at fdebeaupuy@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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Companies Mentioned

  • GE
    (General Electric Co)
    • $25.63 USD
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  • KEP
    (Korea Electric Power Corp)
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    • -4.69%
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