Japan’s nuclear export ambitions hit wall as Vietnam set to rip up reactor order

Vietnam's decision, attributed to lower demand forecasts and rising costs as well as safety concerns, also deals a broader blow to the global nuclear business.

By: Reuters | Tokyo/hanoi | Updated: November 18, 2016 7:10 pm
vietnam, japan, japan nuclear export, vietnam japan nuclear export, nuclear relation vietnam japan, world news Japan has never led a nuclear project to completion overseas and Abe has lent his office’s prestige to attempts to win contracts, most recently in Turkey. (Source: AP Photo)

Vietnam is poised to abandon plans for Japanese firms to build a multi-billion dollar nuclear power plant, damaging Prime Minister Shinzo Abe’s drive to begin exporting reactors after the Fukushima disaster left the industry in deep-freeze at home. The Japanese government said in a statement this week that it had been informed by Vietnamese Deputy Prime Minister Trinh Dinh Dung that Hanoi was close to a decision to cancel the project. Japan’s Minister of Economy, Trade and Industry, Hiroshige Seko, described the move as “very regrettable.” Vietnam’s decision, attributed to lower demand forecasts and rising costs as well as safety concerns, also deals a broader blow to the global nuclear business.

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Countries from Germany to Indonesia have decided to either pull out of nuclear energy or cancel development plans in the wake of the Fukushima nuclear disaster in 2011, the world’s worst since Chernobyl in 1986. “Vietnam is only the latest in a long list of countries, including more recently Chile and Indonesia, that have postponed indefinitely or abandoned entirely their plans for nuclear new-build,” said Mycle Schneider, a Paris-based energy analyst.

Though it has sought contracts for years, Japan has never led a nuclear project to completion overseas and Abe has lent his office’s prestige to attempts to win contracts, most recently in Turkey. The dented ambitions for exports come at a time when Japan is struggling to restart dozens of reactors shut down in the wake of Fukushima. “This is a major blow to Japanese ambitions to, finally, export their first nuclear reactors,” said Schneider.

Hanoi first awarded the contract to Japan in 2010. Under the plan, private utility-led Japan Atomic Power was coordinating a consortium of firms, including Fukushima operator Tokyo Electric Power and equipment makers including Hitachi and Toshiba. A spokesman for Japan Atomic Power said the company had not been in touch with Vietnam since finishing a feasibility study, without providing further details. According to the World Nuclear Association, the study was completed in 2013.

DEMAND GROWTH EASING

Vietnam’s parliament is set next Tuesday to formally approve scrapping the Japanese deal, as well as the country’s first nuclear project, which was awarded to Russia’s Rosatom, according to state media. Rosatom said it would not comment until the Vietnam parliament formalised the decision. The Japanese and Russian nuclear plants were supposed to have been located in central Ninh Thuan province. The two plants would have had a combined capacity of 4,000 megawatts. The Ninh Thuan 2 No. 1 reactor was due to begin operations in 2021, followed by the Ninh Thuan 2 No. 2 unit in 2022, both to have been supplied by Japanese companies. The Rosatom reactors at the Ninh Thuan 1 plant were due to start operating in 2020.

With its power consumption growth now forecast to slacken, the fate of longer-range plans to build out a nuclear power capacity to 15,000 megawatts is shrouded in doubt. Vietnam’s annual power demand growth is projected at 11 percent between 2016 and 2020, and 7-8 percent through 2030 , Duong Quang Thanh, chairman of state utility Vietnam Electricity group was quoted as saying by state-run Voice of Vietnam radio. That compares with a 17-20 percent annual increase forecast when the government first kicked off its nuclear plans.