July 27, 2007	Friday	Rajab 11, 1428

PARIS, July 26: French company Areva was close to clinching the biggest contract in its history on Thursday, with France and China set to sign an agreement on construction of two third-generation EPR nuclear reactors, sources close to the deal said.

The value of the agreement, just seven months after a setback for Areva in China, was not immediately known.

However, the cost of the first EPR (European Pressurised water Reactor) built by Areva in Finland was put at about three billion euros ($4.1 billion).

China, the world's second-biggest energy consumer, has been seeking alternatives to fossil fuels, including nuclear power, to support its rapid economic growth.

Over the coming years, China will build as many as three new nuclear power plants annually, bringing total installed capacity up to 40 gigawatts by 2020, according to the nation's long-term development plan for atomic energy.

The signature of the letter of intent between Areva and its Chinese partner CGNPC (China Guangdong Nuclear Power Corp) will come seven months after Areva lost out to American giant Westinghouse for a multi-billion-dollar contract to build four third-generation reactors in China.

France and China would conclude the deal on Tuesday to build the reactors in China, the sources said. French Economy Minister Christine Lagarde was to attend a signing of a “letter of intention” in Beijing.

Talks were still under way on Thursday on some aspects of the contract and to determine whether it would be initialled by the industrial groups or by government representatives, the sources said.

Another source said the letter would be signed by the two companies, in the presence of the finance minister.

In early February, sources had said the two public groups were “in advanced discussions” on the latest China project.

According to another source at the time the sticking point was how the reactors would be delivered, with Areva holding out for a turnkey project while the Chinese side wanted Areva simply to supply the goods.

French electricity utility EDF had also proposed a scheme with CGNPC as the main builder, EDF as the assistant and Areva as supplier.

The deal will not be a turnkey project for Areva, but the company will provide the reactor as well as other aspects.

CGNPC based in the southern province of Guangdong, is a long-standing partner of Areva and EDF in China. It runs the Daya Bay and Ling Ao power stations in the south, which the French companies helped to construct in the 1980s and 1990s.

EDF, which is in the running to operate the reactors, will not sign the letter, but will conclude an accord with the Chinese company later, the sources said.

Areva and EDF declined to comment on the report.

Areva is currently building an EPR in Finland, serving as main builder and supplier, and should begin work on a second in France toward the end of the year in Flamanville in the northwest.

The French company is also a candidate to build EPRs in the United States and in Britain, countries that have placed a renewed focus on nuclear energy.—AFP