Areva Sees New Bank-Loan Rules Hurt Exports of Reactors

Areva SA, France’s nuclear power-plant developer, said new banking rules have boosted borrowing costs, leaving it at a disadvantage in exports to Japanese and U.S. suppliers with access to cheaper state loans.

“Our competitors are financing new nuclear plants at about 4 percent interest,” Chief Operating Officer Philippe Knoche said today at a conference in Paris. “New prudential mechanisms in Europe are pushing banking loans to 7 percent,” more than doubling the cost of projects such as nuclear plants.

Lenders are being forced under a set of international rules, known as Basel III, to increase capital and liquidity to protect against borrowers’ failure to pay. Banks have said they may cut back on loans to businesses and households in response.

The French government “is thinking of mechanisms to make up for this banking problem,” Knoche said. The measures, targeted at export aids for small and medium-sized businesses, need to go “much further” in helping larger producers match foreign rivals, Knoche said.

Competition for Paris-based Areva is increasing as demand for nuclear projects has declined, in part because of the March 2011 tsunami in Fukushima, Japan, that led to a partial reactor meltdown, and as gas becomes more plentiful as a fuel. Areva’s last orders for nuclear reactors date back to 2007. Since then, it has failed to win tenders in the United Arab Emirates and the Czech Republic.

Chief Executive Officer Luc Oursel is targeting 10 orders for Areva’s EPR nuclear reactor model by 2016, seeking contracts in countries such as the U.K., China, India, Poland and Saudi Arabia. Areva is currently building an EPR reactor in Finland, one in France, and two in Taishan, China.