Response to Greenpeace’s open letter

Response to Greenpeace’s open letter

Ms. Sini Harkki, Programme Manager, Greenpeace Finland

The organization you represent approached us with four questions, which we have responded to below to the best of our ability. Wishing that the rest of summer is warm and the upcoming autumn season is full of work.

CEO Toni Hemminki and Fennovoima Communications

1. Will all loan capital needed for Fennovoima be paid from Russian funds?

Regarding the funding of Fennovoima’s nuclear power plant, the intent is to use capital invested by Fennovoima owners as well as debt financing procured from different sources.

The owners’ equity will cover one-quarter of the costs of the Hanhikivi 1 project. It has been agreed to invest a total of about EUR 1.7 billion of equity, the last instalment of which will be invested in conjunction with the commercial commissioning of the plant.

The rest will be borrowed capital; Rosatom’s subsidiary JSC Rusatom Overseas is responsible for securing it. The first loan instalment, approximately EUR 900 million, was drawn in spring 2015. The company has planned to cover this funding need from several financial sources, including export credits from Russia and other supplier countries. The first portion of the project’s debt financing is made up of about EUR 2.4 billion in funding originating from Russia’s National Wellbeing Fund and reissued to Fennovoima for the Hanhikivi 1 project by JSC Rusatom Overseas as a shareholder loan. Fennovoima and JSC Rusatom Overseas signed a shareholder loan agreement in spring 2015, which is also when Fennovoima withdrew the first loan instalment.

The plan is to refinance the debt taken during the construction period over the power plant’s operating phase. The capital necessary to pay the loans will be collected during the operating phase as part of the cost price electricity charged to the shareholders. The payment of loans and interest fees is part of the fixed production costs in accordance with Fennovoima’s Articles of Association.

In addition to the actual power plant and the directly related infrastructure (plant delivery), the project’s overall expenses also include other expenses, such as financing expenses, nuclear waste management and, e.g., Fennovoima’s organizational expenses. When all these expenses are added together, they amount to approximately EUR 6.5–7 billion.

The power plant was ordered on a fixed price, turnkey basis. The plant supplier is responsible for staying within the agreed upon budget and schedule. The delivery agreement also includes sanctions for any project delays.

The project funding is presented in Appendix 1C of the Construction License Application [in Finnish].

2. You said that you have secured 60-per cent domestic ownership. Does that number include only those investors that genuinely want to participate in Fennovoima?

Fennovoima has two owners, Finnish Voimaosakeyhtiö SF (66%) and Rosatom’s subsidiary RAOS Voima Oy (34%).

The document supplied by Voimaosakeyhtiö SF (appended to the Construction License Application, link below) lists all the company’s direct shareholders. Five of the shareholders have not committed to further financing of the project, but, nevertheless, own Voimaosakeyhtiö shares. At the plant commissioning phase, these companies will account for a total of 0.6% of Voimaosakeyhtiö share capital.

The rest of the shareholders have given Voimaosakeyhtiö SF binding financing commitments. In return, the shareholders will receive cost price electricity from the power plant in proportion to their ownership in the company. Voimaosakeyhtiö SF will always own at least 60 per cent of Fennovoima Oy.

Read more about Voimaosakeyhtiö’s ownership here [in Finnish]:

3. Can anyone become a shareholder in the Fennovoima project just by announcing so in a press release?

No, it isn’t possible to become a Fennovoima shareholder through a press release. Our domestic owner company Voimaosakeyhtiö SF chooses its shareholders. See the response to question 2.

4. Where is the remaining 249 kilos of Fennovoima’s Construction License Application?

The safety aspect in building a nuclear power plant is emphasised already at the planning phase, which is apparent in how carefully the authorities monitor the work. No other industry sector has a permit process that is as safety-focussed. The responsibility for plant safety is with the license holder, i.e. Fennovoima.

The actual Construction License Application is made up of one ordinary binder; it was submitted both in print and electronic format to the Ministry on 30 June 2015. It is available for reading here [in Finnish]:

In order for the Government to grant a construction license for Fennovoima’s nuclear power plant, it must receive a favourable safety assessment from the STUK Radiation and Nuclear Safety Authority. In order for STUK to be able to issue such an assessment, it must review and approve the detailed safety documentation about the plant to be constructed. This documentation, which is submitted both in print and electronic format at STUK’s request, weighs an estimated 250 kg. The documentation will be submitted in phases up to summer 2017. So the 249 kilos you are asking about is currently in the works.

The documentation consists of nearly 50,000 pages describing in detail the technology of the nuclear power plant and the plant site, and it also includes a description of the organisations of Fennovoima and the plant suppliers. Among other things, a plan for principles of ageing management for systems, structures and components is required from Fennovoima. Fennovoima must also present a general plan for the decommissioning and demolition of the nuclear power plant. The bulk of the documentation to be submitted to STUK consists of the preliminary safety analysis report, which must describe the plant down to the system level.

We suggest reading the topic-related article published by Vihreä Lanka on 18 June 2015 [in Finnish]: