Japan cancels $22 billion Turkish nuclear power project

A Japan-led consortium has cancelled plans to build a nuclear power plant in Turkey citing rising costs and failure to agree revised financing terms with the government.

Mitsubishi Heavy Industries and its partners have pulled out of the project after construction costs rose to 5 trillion yen ($44 billion), about double original projections, Nikkei Asia Review reported on Tuesday, citing sources it didn’t identify.

The project, agreed with the Turkish government in 2013, was due to start production in 2023, the centernary of the Turkish republic, and projected to have a final capacity of 4,480MW by 2028. A consortium of Japanese and French firms were to build and operate the four reactors in Sinop on Turkey’s Black Sea coast.

The contract was cancelled after Mitsubishi couldn’t agree on a revised cost estimate with the Turkish government, Nikkei said. The two sides were also unable to reach a deal on financing terms and prices to be paid for the electricity generated by the plant, it said.

Many energy firms in Turkey are struggling to make a profit after the government kept the price of electricity at low levels to stimulate the economy and a currency crisis, which erupted earlier this year, brought a surge in financing costs. Several local firms have cancelled projects, applied to banks to restructure loans or filed for bankruptcy protection.

Japan now plans to continue supporting Turkey’s energy industry in other ways, possibly by constructing an advanced coal-fired power plant with reduced carbon emissions, Nikkei said.