MHPS ends with boiler settlement

9 January 2020

MHI and Hitachi have settled their dispute relating to problematic MHPS boiler projects at coal fired power plants in South Africa (Medupi and Kusile). One outcome of the settlement is that Hitachi will withdraw from MHPS (Mitsubishi Hitachi Power Systems, Ltd), the joint venture formed in 2014 to integrate the companies’ respective fossil power generation businesses. Hitachi will transfer all its shares in MHPS (35% of the total) to MHI and in addition make additional payments to MHI, resulting in a revision of Hitachi’s 2019/20 business forecast to allow for “expenses of 378 billion yen due to ‘settlement of the South Africa project.’”

MHPS will become a 100% subsidiary of MHI. Hitachi says it will continue to work with MHI on maintenance services at existing fossil plants, but the future paths of the two companies are likely to be somewhat different. Hitachi is due to complete acquisition of ABB’s power grid business in the first half of 2020, and describes its future focus as “social innovation business”, as well as providing “high-value-added energy solutions”, and involvement in grid stabilisation, decarbonisation, renewables, nuclear power and distributed generation.

The settlement was reached through “sincere and conscientious discussions,” the companies said. It marked an “amicable and final resolution”, enabling both companies to focus on their respective businesses.

Seiji Izumisawa, president & CEO, MHI, said: “Despite a significant gap in the way we viewed the situation, we continued earnest discussions and were able to land on a conclusion that both sides could accept. I express my deepest thanks to all those working on these [South African coal] projects and the effort they are putting in over many years. We will now work towards the completion of the projects, along with strengthening the management of MHPS.”

Toshiaki Higashihara, president & CEO, Hitachi, expressed his appreciation “to everyone concerned in both companies” and said his company would “further focus on social innovation businesses” with the aim of realising what he called “human-centric society” where “people can live in safety, security and comfort.”

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