Toshiba has agreed to pay $2.168bn as compensation for quitting from fulfilling a contract to build two nuclear reactors for a US project owned by South Carolina Electric & Gas Company (SCE&G) and Santee Cooper.
The Japanese firm’s subsidiary Westinghouse Electric was given the engineering, procurement, and construction (EPC) contract for the units to be installed for the V.C. Summer Nuclear Station being built in Jenkinsville, South Carolina.
However, Westinghouse Electric went bankrupt in March which also affected the Vogtle nuclear expansion project in Georgia where Toshiba has agreed to pay $3.68bn as parental guarantees.
According to SCE&G, the principal subsidiary of SCANA and state-owned utility Santee Cooper, Toshiba will make installment-based payments from October 2017 until September 2022.
SCE&G will get a payment of $1.192bn reflecting its 55% stake in the project, while Santee Cooper will be paid $976m for its 45% ownership.
Under the terms, Toshiba has agreed to pay the amount regardless of whether both or any of the nuclear units are completed, or even if the project is called off totally.
As per the parties, Toshiba will be entitled to be paid an appropriate sum if the specified maximum amount it has to pay is more than the actual construction costs following the completion of the two nuclear units.
SCANA chairman and CEO Kevin Marsh said: “We are committed to making a financially responsible decision for our customers and other stakeholders.
“We are close to completing our analysis of the various options to determine the most prudent path forward.”
The project owners are expecting that the overall construction costs will be higher than what was estimated by Westinghouse. They also anticipate the completion of the reactors to be delayed, beyond the original date of January 1, 2021.
SCE&G and Santee Cooper would also take a call soon on whether they should move ahead in completing the two units or only one of them.
Image: V. C. Summer Nuclear Station Unit 1 in South Carolina. Photo: courtesy of DJSlawSlaw/Wikipedia.org.