When they're already in a financial blackhole... LOL
UK govt's $839m buyout may be best exit for Chinese firm from troubled nuclear plant
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Published: Nov 30, 2022 11:13 PM
Photo: Screenshot from edfenergy.com
The UK government confirmed on Tuesday that it would spend 700 million pounds ($839 million) of its taxpayers’ money amid the worst cost-of-living crisis in decades simply to buy out a Chinese firm’s stake in the Sizewell C nuclear power plant, which has been plagued by massive delays, uncalculatable costs and serious pushback from some UK groups.
China General Nuclear (CGN), which had a 20 percent stake in the plant, has agreed to back out of the project. There is no doubt that the Chinese firm has been pushed out by the UK government and has faced losses after years of involvement in the project. Still, the firm’s decision should be respected and it might be best for the company to leave the project, which is clearly going nowhere in the near term, let alone making any profit. The company is better off leaving the mess behind and moving on.
But what’s really puzzling is that some UK politicians and media outlets are clearly taking a victory lap over the move. “I can confirm that China has now been bought out of the deal on Sizewell and the money ensures they will no longer be involved in future development,” said UK Business Secretary Grant Shapps.
Evidently, British officials like Shapps are trying very hard to sell the move as an example of Prime Minister Rishi Sunak’s administration being “tough” on China, after a speech by Sunak failed to impress some radical anti-China forces in the UK. During the closely watched speech on Tuesday, Sunak declared that the “golden era” in UK-China relations was over and stated that “China poses a systemic challenge to our values and interests.” Still, some radical politicians in the UK called the stance “soft” and even “appeasement” toward China.
This explains the decision to buy out the Chinese firm’s involvement in the nuclear power plant project, which was confirmed shortly after Sunak’s speech on Tuesday. So, in essence, the UK government is spending the money just to prove to its critics that Sunak is really “tough” on China. For many fair-minded people, this is beyond absurd. It’s complete madness. Unfortunately, this has become the reality in some Western countries, where “getting tough” on China has become the catch-all excuse for irresponsible policymaking and profound ineptitude in tackling acute domestic issues.
Regarding the buyout deal for the Sizewell C nuclear power plant, British politicians are celebrating now but they apparently have not thought it through. Faced with a series of questions, including how the UK government will be able to find the rest of the funding for the project, Shapps deflected. "We're very confident actually, because we've been speaking to potential investors," he said. "We've got no concerns at all about people investing in Britain." Such vagueness doesn’t inspire confidence at all. In fact, the UK government’s move on Tuesday only creates greater uncertainty over the project.
Needless to say, the UK government’s move doesn’t make any sense economically. The 700-million-pound investment only represents a tiny proportion of the estimated cost of up to 30 billion pounds. All the signs so far suggest the UK government has no plan for the rest of the funding. In fact, UK officials have not even been able to put out an estimate of the ultimate cost for the project.
And then there is the growing pushback within the UK against the project, with or without Chinese investment. Many groups have complained that the project is too expensive and takes too much time to build. Some have questioned the importance of the project in helping address the UK’s energy crisis and climate efforts. Some have also taken issue with the fact that the project will use a French-designed and built reactor. Some mocked the UK’s so-called Great British Nuclear campaign as “neither great nor British.”
With so much pushback and uncertainty as well as the political chaos in the UK, which has had three prime ministers in two months, it is a real question whether the project will be completed at all. If that’s the case, the UK taxpayers’ 700 million pounds and much more could very well go to waste. Even if the project is completed one day, it will not come cheap or soon. Who will pay for that? It certainly won’t come out the pockets of UK politicians, and given the difficulties of the project, investors are unlikely to pick up the check unless promised something big in return.
I am not arguing that only Chinese companies can build the project. What I’m saying is that making such a major business decision based purely on geopolitical bias and Cold War mentality has a massive cost. If you need an example, look no further than the UK’s decision to replace Huawei equipment, a move pushed by the US. The move could delay the UK’s 5G rollout by up to three years and cost as much as 2 billion pounds. Indirectly, the move could cost the UK economy up to 18.2 billion pounds, according to Huawei. Apart from the cost, the effort to replace Huawei equipment is not going well at all, as many UK firms are struggling to comply; last month, the UK government extended the deadline by one year.
Obviously, it is up to UK taxpayers to decide if they want to pay for all that and what comes next in the UK government’s escalating geopolitical brinksmanship against China. But what is clear for all to see is that playing geopolitical games with businesses does not bode well and any political decision that undermines Chinese interests will not go unchecked.
