TOKYO -- Mitsubishi Heavy Industries and trading house Itochu are working on a deal to take a combined stake of 30% in a nuclear plant project in Turkey, seeking opportunities abroad amid a dearth of new business at home.
In the 2 trillion yen ($15.8 billion) project, the Japanese duo and French power utility GDF Suez are expected to hold a combined interest of 51% in a joint venture that will build and operate a nuclear plant in the Black Sea city of Sinop.
Mitsubishi Heavy and Itochu are considering owning about 15% each in the company, or about 180 billion yen in all. The percentage and the total cost of the project may change after a feasibility study.
Under an agreement between the Japanese and Turkish governments, financing will consist of 70% lending and 30% equity. The Turkish side will take a 49% stake in the joint venture, with state-owned power company EUAS holding shares. Of the remaining 51%, the French company will hold 21% and the Japanese side 30%.
Each reactor will cost about 500 billion yen to build. If all goes according to plan, construction will begin as early as 2017 to build a total of four reactors. The first would begin operation in 2023 and the last in 2028.
The joint venture will repay the investments with revenue from electricity sales. A 20-year agreement with a Turkish utility calls for average prices of 10.8 cents to 10.83 cents per kilowatt-hour.
Mitsubishi Heavy aims to raise overall sales to 5 trillion yen in fiscal 2017, up 1 trillion yen from fiscal 2014, under its latest three-year business plan.
The deal will mark the company's first foray into operating nuclear plants, a step beyond its traditional role of just selling machinery and equipment. Mitsubishi Heavy aims to maintain its nuclear-related technical capabilities by landing business beyond the stagnant Japanese market.