January 12, 2018 / 7:33 PM / 6 months ago

Brazil struggles to find investors in on-again, off-again nuclear project

SAO PAULO/RIO DE JANEIRO, Jan 12 (Reuters) - Brazil’s government is struggling to attract investors to restart construction on its Angra 3 nuclear plant, where work has been halted since 2015, three people familiar with the matter told Reuters.

The government continues to talk to potential investors, including Russian and Chinese companies, but remains far from a deal, according to two of the sources, who were not authorized to speak about ongoing negotiations.

State-controlled Centrais Eletricas Brasileiras SA is building what would be Brazil’s third nuclear plant. Through its Eletronuclear unit, Eletrobras has already invested 5 billion reais ($1.56 billion) in the facility, which is two-thirds complete, and has contracted equipment from foreign and domestic suppliers.

The company now needs 13 billion reais to finish the project, and the proposed price of electricity produced would need to increase, according to the sources.

“We are studying the possibility that the construction would be completed by a foreign company ..., with Eletronuclear responsible for operation of the plant,” the Eletrobras unit said in an email.

Eletronuclear said a new business plan for Angra 3 should be ready by June 2019, with an aim to complete the plant by 2025.

The company said it had signed memorandums of understanding with China National Nuclear Corp Ltd and Russian state-owned nuclear company Rosatom, while it is close to a similar agreement with Electricite de France SA.

CNNC’s main interest is selling equipment, a difficult prospect for Angra 3, given the advanced stage of the project. As a result, CNNC wants guarantees of more nuclear projects in the future, although none are currently planned, said a source close to the company.

All of the memorandums open the possibility of collaboration on future nuclear projects, but that is a decision for later, Eletronuclear said.

CNNC could not be reached for comment. France’s EdF declined to immediately comment.

Rosatam’s Latin American subsidiary is waiting for more information on the plant’s business model to decide how much to participate, a spokesman said.

A person close to Eletrobras said that to be feasible, the plant must raise the planned electricity price from roughly 240 reais per megawatt hour to 400 reais. Eletronuclear confirmed it was reconsidering the price.

Construction of Angra 3 halted in 2015 amid a financial crisis at Eletrobras and allegations of corruption in handing out contracts for the project.

Work on the project had started in the 1980s but quickly stalled due to lack of resources before resuming in 2009.

$1 = 3.2142 reais Reporting by Luciano Costa in Sao Paulo and Rodrigo Viga Gaier in Rio de Janeiro; Writing by Jake Spring; Editing by Lisa Von Ahn

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