UK guarantees £2bn nuclear plant deal as China investment announced

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Hinkley Point C Border Sign
A sign marks the borders of the site where EDF Energy's Hinkley Point C nuclear power station will be constructed in Bridgwater, southwest England October 24, 2013. REUTERS/SUZANNE PLUNKETT

British Chancellor George Osborne announced the United Kingdom will set aside £2 billion (US$3 billion) to guarantee the construction of the Hinkley Point C nuclear power station in southwest England. He broke the news Monday during his trip to China.

Energy Secretary Amber Rudd told the Financial Times that Chinese developers want to lead and design the nuclear plant. When built, the plant will power about six million homes, or seven percent of all homes in the UK.

Bloomberg reported the guarantee is seen as the catalyst for the final investment by Electricite de France SA supported by China National Nuclear Corporation and China General Nuclear Corporation. The government is offering the £2 billion to attract lenders should developers of the construction plan fall into financial straits.

Without the guarantee, EDF and its partners would have a hard time securing the funds needed to finance the project. Osborne said the proposed nuclear plant will boost the UK’s economy. He noted that the plant part of a wider nuclear collaboration project valued at tens of billions of pounds.

The government, through Infrastructure UK, has received state aid clearance from the European Union to guarantee as much as £16 billion in loans for the Hinkley Point project, reported The Telegraph . Developers are to pay Infrastructure UK an annual fee of 2.95 percent of the value of the loan. The £2 billion loan has to be repaid by 2020.  

The Financial Times reported that the agreement between Britain, France and China will help pay for the Hinkley project construction and a second nuclear power plant in Suffolk. In return, the Chinese will take a controlling stake in a new power plant being planned for Essex. This plant at Bradwell will be the first Chinese-built and run nuclear reactor in the West.  

UK guarantees £2bn nuclear plant deal as China investment announced (Credit: YouTube/Top Breaking News)

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