The future of a Japanese-led nuclear power plant construction project in Turkey is in doubt after estimated costs more than doubled to over 4 trillion yen ($37.5 billion).
It will also be difficult to complete the plant, planned in the Sinop district on the Black Sea coast, by the target year of 2023, according to sources close to the project.
Plans call for the construction of four new-type reactors co-developed by Mitsubishi Heavy Industries Ltd. (MHI) and a French partner. Trading house Itochu Corp. and other Japanese companies also plan to get involved.
The Japanese side unofficially informed its Turkish counterpart of the bloated cost this year, and the Turkish side expressed its “disappointment,” the sources said.
Initially, the total project cost was estimated to be around 2.1 trillion yen ($19.7 billion). However, it became clear during the course of a feasibility study that the four reactors would cost more than 1 trillion yen each.
The project partners were expected to shoulder the construction expenses and recoup the cost of their investment through revenue from power generation.
But if construction costs increase and the operator cannot charge more for electricity, it would be difficult for the project to turn a profit.
Still, the Japanese government intends to proceed with the project, and the Japanese side will soon submit its final feasibility report to the Turkish government.
The Japanese side will report that if the plan goes ahead, the construction will require financial support from the Turkish government and that electricity charges will be increased from initial estimates.
It remains unclear whether the Turkish side will accept those conditions, the sources said.
The project has strong backing from the Abe administration, which is pushing exports of Japanese nuclear technology as part of its growth strategy.
However, tougher safety standards introduced after the triple meltdown at the Fukushima No.1 nuclear power plant in 2011 have made it difficult for Japanese companies to make money in the global nuclear power industry.