British govt offers $18 bln to Hitachi's UK nuclear project - Kyodo

(Adds further comment from UK govt)

TOKYO, May 17 (Reuters) - The British government has offered 2 trillion yen ($18 billion)in financial support to a unit of Japan's Hitachi Ltd to build nuclear reactors in Wales, Kyodo News reported on Thursday.

Ageing reactors supply more than 20 percent of Britain's power but almost half of this capacity is due to go offline by 2025, prompting the government to plan new plants.

The British government is offering support in loans and other ways to Hitachi unit Horizon Nuclear Power to cover a large proportion of the cost of its Wylfa Newydd project in Wales, Kyodo reported, citing a source close to the matter.

A spokesman for Britain's Department for Business, Energy and Industrial Strategy said: "We don't recognise these news reports."

"Discussions are commercially sensitive and ongoing, we have no further details at this time," he added.

Hitachi could decide as early as this week whether to go ahead, Kyodo said. It said the government's offer was aimed at easing concerns about rising cost expectations, which have increased to 3 trillion yen.

A Hitachi spokesman declined to comment when contacted by Reuters.

The Kyodo report cited unidentified observers questioning whether the government would be able to carry out the offer, due to parliamentary opposition.

The British government played down a Japanese media report last week which said it would guarantee loans for the construction of the two reactors in Wales.

Britain is seeking new ways to fund nuclear projects after drawing criticism over a deal awarded to France's EDF (Swiss: EDF.SW - news) to build the UK's first nuclear plant for 20 years, which could cost 30 billion pounds ($40 billion).

Hitachi's Horizon plans to construct at least 5.4 gigawatts of nuclear capacity at two sites in Britain – the first at Wylfa Newydd, and the second at Oldbury-on-Severn in England.

Cracks found recently in the core of a reactor at the Hunterston B power station in Scotland have prompted concerns that Britain's ageing plants will not be able to supply as much power as expected.

($1 = 0.7402 pounds)

($1 = 110.7000 yen) (Reporting by Aaron Sheldrick and Kiyoshi Takenaka; additional reporting by Nina Chestney in London; editing by Christian Schmollinger, Jason Neely and Dale Hudson)