Candu Energy hopeful about selling two nuclear reactors in Romania

Candu Energy is hopeful about selling Canada’s first nuclear reactor in years after Romanian and Chinese state-owned companies signed a letter of intent to invest in and develop two new reactors in Romania.

The subsidiary of SNC-Lavalin (TSX:SNC) said Wednesday that the new units would be built at the Cernavoda site where initial construction was halted in the early 1990s.

“We would expect that Candu would be a part of that because we are the exclusive licensee of that technology,” Candu spokeswoman Katherine Ward said in an interview.

She said Candu officials are in Romania meeting with the China Nuclear Power Engineering Co., which will visit Canada to conduct due diligence.

“We have been talking to them about Cernavoda 3 and 4 as well as the potential for co-operation in other export markets.”

Two Candu 6 pressurized heavy water reactors went into service in 1996 and 2007 and are generating about 20 per cent of Romania’s energy supply. They were supplied by the Atomic Energy of Canada Ltd. and built by a Canadian-Italian consortium of AECL and Ansaldo.

Analyst Maxim Sytchev of Dundee Capital Markets said the letter of intent is potentially positive for Candu, but it’s unclear how fast actual money could flow.

Candu declined to say how much the project could be worth.

The Chinese partners would likely be responsible for some of the construction but Sytchev said Candu’s share of the Romanian project could be at least 10 per cent of the total cost, or more than $1 billion.

“Directionally speaking it’s positive for Candu,” Sytchev said “It’s difficult to quantify just in terms of the potential size, but just in the consulting piece it’s going to be hundreds of millions of dollars for a number of years if they do proceed to construction,” he said.

But just because two state-owned companies are involved doesn’t mean the long-standing Romanian nuclear project will actually be completed, he added.

“The money was supposed to be coming from the Ontario government as well to bankroll Darlington and look where that went.”

Ontario’s Liberal government pulled the plug last month on plans to build new reactors in Darlington, Ont., saying the province doesn’t need the power to meet its electricity demand.

Established in 1994, Romania’s Chinese energy partner has more than 6,000 megawatts of installed global nuclear capacity and 17,750 MW under construction.

Romania’s Societatea Nationala Nuclearelectrica had been looking for investors after several partners, including GDF Suez, withdrew from the project after a company was established in 2009 to oversee the completion of units 3 and 4.

Candu Energy has focused on refurbishment projects in Argentina and Ontario as it looks for opportunities for costly new builds. Montreal-based SNC-Lavalin acquired the commercial operations of the Atomic Energy of Canada in 2011 for $15 million plus future royalties.

Its 1,400 employees design, build and service nuclear reactors that supply nearly half of Ontario’s electricity and 16 per cent of Canada’s overall electricity requirements.

The company has operations in Ontario, Quebec and New Brunswick. Reactors designed by Candu supply more than 22,000 megawatts of power at sites around the world.