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Westinghouse bankruptcy: India hopes no impact on N-projects; not abandoning bids, says company

US nuclear giant Westinghouse Electric Company has filed for bankruptcy, raising uncertainties over the implementation of the landmark Indo-US civil nuclear deal.
India TV Business Desk New Delhi March 30, 2017 18:34 IST
India TV Business Desk

US nuclear giant Westinghouse Electric Company, a unit of Japan's embattled Toshiba Corporation, today filed for bankruptcy protection, raising uncertainties over the implementation of the landmark Indo-US civil nuclear deal. 

While India, which is monitoring developments, emphasised that the outlook of global industry on cooperation in India's civil nuclear programme remains "positive", the US reaffirmed its commitment to Indo-US civil nuclear cooperation. 

Westinghouse Electric Company is a US unit of Japan's Toshiba Corporation. Toshiba said in a statement that the unit filed the Chapter 11 petition in the US Bankruptcy Court of New York. 

The move by Westinghouse, which is to build six reactors in India under the Indo-US civil nuclear deal inked in 2008, has raised uncertainties over the future of the implementation of the historic pact. 

Westinghouse was to build six reactors in India under the Indo-US civil nuclear deal inked in 2008. The White House had last year announced that Westinghouse and the Nuclear Power Corporation of India (NPCIL) had agreed to begin engineering and site design work immediately and planned to conclude contractual arrangements by June 2017.

The Westinghouse is currently holding commercial negotiations with NPCIL for the construction of the reactors. 

The company has said it will no longer take on new reactor construction projects and will focus on maintaining the reactors it already has. But it is also involved in the decommissioning of the Fukushima Dai-ichi nuclear plant, which suffered multiple meltdowns after the March 2011 tsunami.

But the company said it will not abandon India bids. 

“We are not abandoning the India bids, as those bids were structured in a manner that does not include construction risk,” Sarah Cassella, external communications manager for Westinghouse, told Hindustan Times via e-mail.

Reacting to the development, an External Affairs Ministry official in New Delhi said, "There are commercial negotiations. We are monitoring all developments. We are engaged with all parties. 

"Our intent is to stick to the deadline for which competitive financing arrangements need to be in place. It must be emphasised that the outlook of global industry on cooperation in India's civil nuclear programme remains positive." 

When contacted, the US Embassy spokesperson in New Delhi said, "We have been closely following developments at Westinghouse and Toshiba. We defer any questions regarding the financial situation of Toshiba or Westinghouse to those respective companies." 

However, the spokesperson said, "We understand that Westinghouse continues to stand behind the delivery model that it presented in its Technical Commercial Offer to India, which included an Indian construction partner, and looks forward to progress on an agreement in 2017. 

"We reaffirm the US government's commitment to civil nuclear cooperation with India." 

The embassy spokesperson also noted that the AP1000 technology is a top quality option in nuclear power generation and the benefits for India, ranging from access to this technology to providing clean power to 60 million Indians, have not changed. 

Toshiba says Westinghouse files for bankruptcy protection 

Toshiba said on Wednesday that its U.S. nuclear unit Westinghouse Electric Co. has filed for bankruptcy protection, marking a key step in its struggles to stop the flow of massive red ink.

Toshiba said in a statement that it filed the Chapter 11 petition in the U.S. Bankruptcy Court of New York. The move had been largely expected.

Toshiba has said it's expecting a loss of 500 billion yen ($4.3 billion) for April-December of last year, including a 712.5 billion yen ($6.2 billion) hit from its embattled nuclear business. It said Wednesday that it was working out revised numbers, and warned that the loss for the fiscal year may grow to 1 trillion yen ($9 billion).

Toshiba acquired Westinghouse in 2006 with much fanfare, making nuclear power an important part of its business strategy.

After the March 2011 nuclear disaster in Fukushima, costs of the business have ballooned because of growing safety concerns and regulations, and a souring of sentiment toward nuclear power in some countries, such as Germany.

Toshiba has been eager to get Westinghouse off its books to improve its plight, and it said it would do just that from this fiscal year. It has said earlier it wants to sell Westinghouse. Toshiba said Westinghouse had racked up debt of $9.8 billion.

Toshiba President Satoshi Tsunakawa said the move was aimed at "shutting out risks from the overseas nuclear business."

"We want to make this our first step toward recovering our solid business," he told reporters after the announcement.

Toshiba reiterated its view that at the root of the problem was the acquisition of U.S. nuclear construction company CB&I Stone and Webster. It declined comment on possible future partners in the rehabilitation of Westinghouse.

Toshiba, which has been unable to report its financial results as required, postponing it into next month, said it would monitor the rehabilitation proceedings and disclose information as quickly as possible.

Its chairman has resigned to take responsibility for the company's troubles.

Auditors questioned Toshiba's latest reporting on the acquisition of CB&I Stone & Webster after a whistleblower, an employee at Westinghouse, wrote a letter to the Westinghouse president.

The company's reputation has also been tarnished in recent years by a scandal over the doctoring of accounting books to meet unrealistic profit targets.

Satoshi Ogasawara, who has written a book about Toshiba's systematically falsifying financial results, says executives knew of the problems for years but kept procrastinating, hoping against hope that things would get better and they would be able to avoid blame. But things just got worse.

"Buying Westinghouse was the beginning of the end," he said. "But even before that, there was a dubious corporate culture."

Toshiba already faced problems in its personal computer business amid competition from Dell, Lenovo and HP. The drop of oil prices combined with the Three Mile Island and Fukushima accidents made nuclear power less lucrative, and plant construction kept getting stonewalled, said Ogasawara. He believes many executives responsible for the mess are still at Toshiba, without being held responsible.

Toshiba has sold off so many parts of its once prized operations, such as computer chips and household appliances, it has little left but its infrastructure business.

(With agencies)