Ministers prepare to reduce UK stake in Sizewell C nuclear project
Under changes to investors, Brookfield dropped in favour of Canadian pension fund and London-based investment manager
Ministers are preparing to reduce the UK government’s stake in Sizewell C by more than expected, after a last-minute move to change the roster of private investors in the multibillion-pound nuclear project.
Canadian investment manager Brookfield had been expected to take a 25 per cent stake in the Suffolk development as recently as Friday, according to people familiar with the matter.
The proposed deal would have made the firm the biggest single investor in the project — part of a push by ministers to use nuclear power to ease Britain’s transition away from fossil fuels — with British Gas owner Centrica taking 15 per cent and French energy giant EDF holding 12.5 per cent.
But the government in recent days moved to drop Brookfield in favour of selling a larger stake to a combination of Canadian pension fund La Caisse and London-based investment manager Amber Infrastructure, the people said.
Two of the people said Brookfield had been angered by the decision, which was first reported by Les Echos.
La Caisse will now take a 20 per cent stake in Sizewell and Amber will take a 10 per cent stake, according to the people, while the stakes of Centrica and EDF are unchanged.
The increased private investor stake means the UK government will own 42.5 per cent of the project, which is set to cost £38bn, down from 47.5 per cent under previous plans. The government currently owns about 84 per cent of the project.
Brookfield declined to comment, as did La Caisse, Amber Infrastructure and the government.
Charles Emond, chief executive of La Caisse, which manages C$473bn (£254bn) on behalf of 6mn pension savers, told the Financial Times in May that it planned to invest more than £8bn in the UK over the next five years.
“We’d like to be a partner of trust and choice in the UK,” said Emond. The government’s plans to increase infrastructure spending were “a huge opportunity and we’d like to be there in the early stages to see if we can do something”, he added.
UK energy secretary Ed Miliband said last month that Sizewell would be the beginning of a “golden age” for nuclear in Britain. He also said the project would be “majority public funded”. The government has committed £17.8bn.
Ministers are set to announce the final investment decision on Tuesday in a rush to seal the long-awaited deal before parliament’s summer recess.
Energy bill payers will pay back the investors via a surcharge on bills under the structure used to develop the scheme, known as the “Regulated Asset Base” model.
Under the RAB model, as used in the £4.2bn Thames Tideway sewer project, investors start getting paid during construction, rather than having to wait until the project is finished. The aim of this is to reduce risks and therefore financing costs for the project.