The nuclear power industry: Financial considerations

It is important not to allow the present liquidity crisis to escalate into economic and political dislocations that could result in a prolonged cessation of necessary capital investment. In assessing the future growth of nuclear power in other parts of the world, it may be instructive to consider the plight of the U.S. industry and the parallels that are apparent. In the United States, electric utility debt is growing too fast; a structural imbalance has developed even on the better corporate balance sheets; and cash flow or internal generation has diminished, particularly as the time needed to complete nuclear plants has extended, thereby precluding revenue production for as long as 10–15 years from the beginning of construction. Newcomers to the lending business may have little appetite to lend in unfavorable climates, and regulatory (political) bodies may irresponsibly allow unproductive use of resources and refuse to adopt difficult but essential economic policies to preserve the financial integrity of the borrower. These issues are relevant in the examination of any lender/borrower relationship, whether it be between sovereign nations, banker and borrower, or vendor and vendee. Given the size of the deferred obligation in the financing of the acquisition of the nuclear machine, unless creditworthiness can be conclusively demonstrated, the machine will not be built. This applies not only to the private corporate entrepreneur in the United States, but also to the sovereign buyer in other countries. “O.E.C.D. Terms Risks In World Debt Narrow” “Regan Urges a Third-World Bailout” “The Banks Should Have Known Better” “Banks Avert World Financial Crisis Over Defaults, but Dangers Remain”