TOKYO -- Japanese trading house Itochu is pulling out of a nuclear power plant project in Turkey due to a surge in safety-related costs, casting uncertainty over the plant's future as well as the Japanese government's infrastructure export ambitions.
The project was agreed on by the Japanese and Turkish governments in 2013. A consortium including Itochu and Mitsubishi Heavy Industries had been conducting a feasibility study until March for the construction of a 4,500-megawatt plant in the city of Sinop on the Black Sea. But costs related to safety measures surged after the Fukushima Daiichi nuclear disaster in 2011, and the estimated costs for the project ballooned to more than 5 trillion yen ($46.2 billion) from 2 trillion yen in 2013.
Itochu, which was jointly conducting the feasibility study with its consortium partners, is expected to avoid involvement in the project. Mitsubishi Heavy and other investors in the consortium have already extended the feasibility study until this summer.
Initially, 30% of the project's cost was planned to be covered by the consortium and 70% by loans from the Japan Bank for International Cooperation and other lenders. The consortium was expected to be 51%-owned by Mitsubishi Heavy, Itochu and French electric utility Engie, and 49% by other entities, including the Turkish Electricity Generation Corp.
The departure of deep-pocketed Itochu will make the project more risky for Mitsubishi Heavy, which is requesting the Turkish government to change the ownership structure of the consortium.