There were no pending court cases or disputes in the end of period under review.
According to the comprehensive settlement agreement signed in March 2018, TVO and the Supplier jointly withdrew the pending arbitration proceedings under the International Chamber of Commerce (ICC) rules with respect to costs and losses incurred in relation to delays in the construction of the OL3 EPR project. In June 2018, the ICC tribunal confirmed the arbitration settlement by a consent award, and the arbitration proceedings were terminated. The parties also withdrew the pending appeals in the General Court of the European Union.
The settlement agreement between TVO and the plant supplier consortium companies Areva NP, Areva GmbH and Siemens AG as well as with Areva Group parent company Areva SA, a company wholly owned by the French State, concerning the completion of the OL3 EPR project and related disputes entered into force late March.
The settlement agreement stipulates that:
In order to provide and maintain adequate and competent technical and human resources for the completion of the OL3 EPR project, Areva will source the necessary additional resources from Framatome S.A.S., whose majority owner is Electricité de France (EDF).
The supplier consortium companies undertake that the funds dedicated to the completion of the OL3 EPR project will be adequate and will cover all applicable guarantee periods, including setting up a trust mechanism funded by Areva companies to secure the financing of the costs of completion of the OL3 EPR project.
The turnkey principle of the OL3 EPR plant contract and the joint and several liability of the supplier consortium companies remain in full force.
The agreement also noted the plant supplier’s schedule at the time the agreement was signed, according to which the regular electricity production in the unit would have commenced in May 2019.
The ICC arbitration concerning the costs and losses caused by the delay of the OL3 EPR project was settled by financial compensation of EUR 450 million to be paid to TVO in two installments by the supplier consortium companies. TVO received the first payment of EUR 328 million as the settlement agreement came into force in March 2018. The second payment of EUR 122 million is payable upon completion of the OL3 EPR project or, in any event, on December 31, 2019 at the latest.
The parties withdraw all on-going legal actions related to OL3 EPR, including the ICC arbitration and appeals in the General Court of the European Union.
The supplier consortium companies were entitled to receive an incentive payment, in a maximum amount of EUR 150 million, upon timely completion of the OL3 EPR project set in the settlement agreement. In the event that the supplier consortium companies fail to complete the OL3 EPR project by the end of 2019, they will pay a penalty to TVO for such delay in an amount which will depend on the actual time of completion of the OL3 EPR project and may not exceed EUR 400 million.
In the first quarter of 2018, TVO made a provision of EUR 150 million reflecting the maximum amount of the incentive payment payable to the supplier consortium companies for timely completion of the OL3 EPR project as agreed in the settlement agreement. In June 2018, TVO received from Areva–Siemens Consortium an updated schedule for the commissioning of the OL3 plant unit. According to the received information, the regular electricity generation at OL3 would have started in September 2019, so, in the second quarter of 2018, the provision was withdrawn by EUR 50 million.
In November 2018, TVO received from Areva–Siemens Consortium an updated schedule for the commissioning of the OL3 plant unit. According to the received information, the regular electricity generation at OL3 will start in January 2020. The new schedule caused total withdrawal of the provision, EUR 100 million, in the last quarter of 2018. These settlement payments to TVO and any penalty payable to TVO due to any additional project delay have been taken into account in calculating the final cost of the OL3 EPR project. Based upon the latest schedule offered by the Consortium, the cost estimation of TVO and settlement agreement, TVO estimates that overall cost of the OL3 EPR project will be approximately EUR 5.5 billion in total. The amount corresponding to the settlement amount have been entered as property, plant and equipment in the Group balance sheet.