The issue will be a major political test for the five-party coalition of Prime Minister Paavo Lipponen as cabinet members are divided over the plan, and parties have given their representatives freedom to vote their conscience on it.

Energy group Teollisuuden Voima (TVO), which has applied for the permit to build the new unit, has estimated building costs at 1.7-2.5 billion euros ($1.50 billion) depending on generator capacity, and said it would fund most of the project with debt.

"The economic and technical record of the Finnish nuclear industry is much better than that of the UK. But nuclear plants are bought on an international market, and there is no reason to think costs in Finland would be dramatically lower," nuclear power researcher Stephen Thomas told a news conference.

He said Britain, the only other country to have attempted boosting nuclear energy capacity in a liberalised electricity market, had found it uneconomical and uncompetitive versus other forms of energy.

In Britain the privatisation of the energy sector caused investors to view nuclear plant investments as relatively high-risk, to demand a higher rate of real return on capital and faster debt pay-back schedules, Thomas said.

"(In an open market) if something goes wrong, it's the tax-payers and the electricity consumers that end up footing the bill. It's not the big companies," Thomas said.

He added that because most reactors now on offer are either outdated or have only been drafted on paper and lack regulatory approval, Finland could also have to pay hefty model development costs on top of the initial bid price.

A TVO spokeswoman said its application was based on 20 years of experience in operating nulear plants, and while the company had not asked for vendors' price estimates, its estimate was based on global reactor price comparisons.