BEIJING: China National Nuclear Corporation (CNNC) will use part of the proceeds of its initial public offering (IPO) in Shanghai to help fund the world's first Westinghouse AP1000 reactor, which has been subject to rising costs and repeated delays.
China's securities regulator gave the go-ahead on Friday to allow the state-owned company, one of China's two biggest nuclear developers, to list its subsidiary, China National Nuclear Power Corp, on the Shanghai Stock Exchange.
CNNC said in a prospectus published on Monday the proceeds would be used in part to fund five major projects requiring a total investment of 13.38 billion yuan ($2.16 billion). It did not disclose how much of the total would be paid for by funds raised via the IPO.
It said when it applied for permission to list last year that it would sell a stake of about 25 percent in the company with the aim of raising 16.25 billion yuan.
The projects include the Sanmen reactor complex in Zhejiang province, where two Westinghouse AP1000 reactor units are planned to be built in the first phase.
China signed a deal with Westinghouse, now owned by Japan's Toshiba, in 2007 for the construction of the world's first AP1000 reactors at sites on the eastern coast.
The first unit was originally scheduled to be completed late in 2013, but it has been delayed until next year because of safety concerns and design changes.
CNNC said in its prospectus the AP1000 project was "facing challenges" when it came to cost controls and the design and manufacturing of key equipment.
"We estimate the construction costs of the project will probably increase somewhat as a result of delays, the rising price of labour and raw materials and higher import tax rates," it said.
The firm is focusing on the development of China's own-brand Hualong 1 reactor designs.
The "third generation" reactor, developed jointly by CNNC and its main rival, China General Nuclear Power Corporation (CGN), is the centrepiece of China's plans to sell its nuclear expertise and technology abroad.
The first domestic Hualong 1 reactor project in southeast China's Fujian province was given the final go-ahead by China's cabinet in April, and CNNC has signed preliminary agreements to build units in Argentina and Brazil.
The China Nuclear Energy Association estimates China needs to spend around 100 billion yuan every year over the next five years to meet its 2020 nuclear capacity target of 58 gigawatts.
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