Westinghouse edging out Areva in China deal

16th March 2006, Comments 0 comments

PARIS, March 16, 2006 (AFP) - Westinghouse appeared Thursday to be winning the contest with its French rival Areva to provide four power plants to China after Beijing opened exclusive talks with the US nuclear group, according to a source close to the matter.

PARIS, March 16, 2006 (AFP) - Westinghouse appeared Thursday to be winning the contest with its French rival Areva to provide four power plants to China after Beijing opened exclusive talks with the US nuclear group, according to a source close to the matter.

"The committee tasked with evaluating offers decided to open exclusive negotiations with Westinghouse at the end of February," the source said Wednesday.

Another source nonetheless insisted that "the matter will be only really lost when the selection committee has officially chosen Westinghouse."

The stock market didn't wait before reacting, with Areva shares plunging by as much as 9.9 percent during the day.

The stock fell on Wednesday in Paris by as much as EUR 55 to EUR 500 before closing EUR 20 lower at EUR 535.

The French company said that "the tender was still in effect", and added: "No official decision by the Chinese authorities has been notified to Areva."

French Finance Minister Thierry Breton insisted on Thursday that Areva was still in the running.

"It is not over and I have confidence in Areva," Breton told French radio.

China said Thursday its decision on any nuclear reactor contracts would be based on market principles, following speculation that France's Areva may miss out for refusing to share technology.

"We know some companies from some countries are interested in cooperation in this field. China's decision will be based on market-driven principles," foreign ministry spokesman Qin Gang told reporters.

Thursday's Le Figaro said that Beijing appeared set to award the contract to Westinghouse, blaming the decision on Areva's reluctance to share technology but also "the political weight which Washington also brought to bear".

According to Les Echos, Westinghouse has proposed selling its plans for US $400 million as well as receiving royalties of US $15 million per year for each reactor.

That figure is much smaller that eight-billion-euro figure that Areva wants to build the four reactors.

Last week, Areva president Anne Lauvergeon declined to comment at length on the tender process, noting only that it included a "growing political dimension".

Les Echos, a French business newspaper, reported Wednesday without naming its sources that Areva, a French state-controlled group, refused to match an offer from Westinghouse regarding technology transfers.

One of the sources who spoke to AFP said that Chinese authorities were trying to pressure Areva into conceding to demands for more transfer of nuclear technology.

Les Echos said that Areva feared that if it supplied China with its technology the Asian giant could create a rival nuclear group that would compete with the French firm in markets such as Brazil or India.

Westinghouse's proposed model currently exists only on paper, whereas the first copy of the design pitched by Areva is under construction in Finland.

But one of AFP's sources said that was actually an advantage for the US group — which is being taken over by Toshiba of Japan — because it would be easier for China to appropriate the technology of a "reactor on paper".

Copyright AFP

Subject: French news

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