“It is now the best time for China’s nuclear energy companies to go overseas,” said Wei Jianguo, former Vice Minister of Commerce and Vice Chairman of CCIEE at the first GNIS Nuclear Investment Forum, held on January 28 in Diaoyutai State Guesthouse, Beijing. In his opinion, the most important support needed by China’s nuclear power is the financial support from different financial service agencies.
The organizer of this conference is Ocean Nuclear, the only private financial institution in China’s nuclear power industry. Mr. Qu Zhen, Chairman of the company said the Ocean Nuclear has already obtained 17 financial licenses despite the fact that the company was only established in 2017. In the future, the company will not only provide support for Chinese nuclear companies to go global, but also provide financial services to global nuclear power transactions.
China’s nuclear power goes global
Why it is now the best time for China’s nuclear power to go aboard? Based on his many years of diplomatic experience, Wei Jianguo believes that many countries currently need clean energy but lack the capital and technology, in particular Africa. China’s nuclear technology has now surpassed that of Japan and France and thus, we should consider how can our nuclear companies to expand their business globally.
He believes that among the 65 countries along the Belt and Road region, there are 93 ports require a lot of project investment, and China has only engaged in 130 projects in these areas.
In recent years, there has been a setback in the development of nuclear energy around the world due to the accident at the Fukushima nuclear power plant in Japan. China’s nuclear power companies have just started to go broad and of course, there is a long way ahead. Dr. Yang Hanxin of the nuclear engineering at the University of Manchester in the United Kingdom, made an example of the “Hualong One”. At the beginning, it was very difficult for people to accept it but as time goes by, things will become relatively easier. Nowadays, everyone is conducting the British general design review, the pass of the review will have a great significance on the overseas expansion of this project because the British general design review is widely recognized as a world pass. Although Germany has abandoned its nuclear program, Britain strongly supports it. The United Kingdom is a country that has clearly backed the establishment of nuclear power plants because the previous equipment is outdated.
In his speech, Qiu Zhen said that only the thermal power, natural gas and nuclear power are considered as stable basic electricity, this is an undeniable reality we must face. As gasoline vehicles are gradually replaced by new energy vehicles, the market will see more pressing demand for electricity, laying a solid foundation for China’s nuclear power to go global.
Private financial service is on the agenda
“Behind the large demand for electricity is the financial demand from the capital-intensive electricity industry,” said Wei Jianguo at the forum. The investment needed for the nuclear projects under the Belt and Road initiative is about 700 billion US dollars, so financial support is crucial for Chinese nuclear companies to go abroad.
Wei Jianguo said that in the United States, France, Japan and other countries, the lending rates to nuclear power plants amounts to 1.7% only, while the lowest rates in China is 2.2%, offered by China’s Export-Import Bank, indicating that the government’s participation or support is particularly important for offering financial support to nuclear companies.
There is still a big weakness when China’s nuclear power try to go global. As most of China’s nuclear power enterprises are super-large state-owned enterprises, the financial services related to nuclear energy are generally very large and long-term in nature, consequently, large state-owned financial institutions are normally the financial providers, which is very easy to cause misleading in the international nuclear market. We should learn our lessons from those failed cases in recent years.
Wang Jin, President of the International Intercontinental Energy Consulting Institute, believes that Ocean Nuclear is a private-owned enterprise, which will be able to ease the concerns other countries might have over China’s overseas merger and acquisition, this will improve the chance of Chinese companies’ overseas merger and acquisition.
Shi Yanyu, senior vice president of Ocean Nuclear, said to Huaxia Times that the nuclear energy projects have a high profitability and long payback period, but the investment is huge and the research cost is high. With the increasing demand of the integration of energy industry and finance, the government’s budget for infrastructure construction is insufficient to cover the need of financing all new nuclear projects and upgrading aging equipment. Therefore, it is vital to provide financing tools for nuclear power projects and fill the financial gap.
The participating experts agreed that private financial service providers will be required to provide services in the areas of financing, investment banks, intermediaries, consulting and financial advisors.
According to Qiu Zhen, Ocean Nuclear has already participated in the following projects: The investment of Russia’s national nuclear power company in Egypt, Turkey and other countries; Germany will introduce financing for other nuclear power projects including the UK; South Korea’s financing for the construction of nuclear power projects in the United Arab Emirates; financing for the project reserved by Japan’s Toshiba nuclear power; Finland promote financing for the VVER project of France, etc.
Qiu Zhen said that Ocean Nuclear not only serves the export of China’s nuclear power business, but also focuses on the financial services demand in five major nuclear power countries so as to enable more emerging countries enjoy clean nuclear power.
In order to better serve the export of nuclear power business, the company plans to set up offices in London, Dubai and Luxembourg and establish close financial cooperation with 68 life insurance companies in China. At the international level, the company will have such partners as the Abu Dhabi Investment Authority, the holding investment company of the Kingdom of Saudi Arabia, the South African National Investment Authority, the Russian state-owned commercial bank VTB, BNP Paribas, Temasek Singapore, Lloyds TSB of England, Qatar National Investment Authority, Qatar Islamic Finance, Deutsche Bank, Korea Industrial Bank, Finnish Estonia Danske Bank, etc.
Xu Yuming, Deputy Director of the Expert Committee at China Nuclear Industry Association, said that there are very few private enterprises in China’s overseas investment in nuclear power, but you can find them easily in many other countries. Undoubtedly, private enterprises will play an active role in boosting China’s nuclear power to expand their business globally.”