Canadian nuclear firms seek government support for Ontario reactors bid

08 August 2008

Atomic Energy of Canada Ltd. and partner SNC-Lavalin Group Inc. are asking the government for billions in financing for their bid to build two nuclear reactors in Ontario, and the government has sent initial signals that some backing will be available.

The companies, who say government support is the only way their bid can compete with global players, are also asking Ottawa to help cover any potential cost overruns, which critics say could mount to further billions of dollars.

In a letter to Natural Resources Minister Gary Lunn, SNC-Lavalin Nuclear president Patrick Lamarre said the Canadian consortium is at a major disadvantage to French and US companies, which he said had access to government-backed financing. He said federal support is critical to maintaining an industry that has enormous export potential as the world turns to nuclear power to meet its growing electricity needs.

Ontario is seeking to buy two new reactors at a cost of at least C$6 billion ($5.7 billion). The Canadians are competing against France's Areva and US-based Westinghouse, which is owned by Japan's Toshiba Corp. They are expected to be operational by 1 July 2018.

The financing request illustrates the expensive and politically fraught decisions now confronting the current government on the future of the Crown corporation. Ottawa, which is considering selling AECL, must not only decide whether it will continue to own a nuclear reactor manufacturer, but also how much support it will provide to the nuclear industry.

In an interview yesterday, the minister indicated broad support for the domestic entity in its effort to win the Ontario bid. However, he would not comment on the specific financing request.