Rosatom

source: Greenpeace briefing: "Rosatom nuclear new build plans outside Russia", 2013-07-22

Rosatom’s role as a Russian state entity

Rosatom is currently in process of collecting the biggest international portfolio of nuclear projects based on a very aggressive strategy. The Rosatom model is based on the BOO = Build, Own, Operate concept. That means Rosatom receives a stake in a company that builds the nuclear power plant, provides technical expertise and provides the majority of financing, runs the actual building process and finally takes care of operating the nuclear power plant. In at least one case, Rosatom has also agreed to handle the disposal of spent nuclear fuel.

Rosatom is a Russian state owned corporation (Государственная корпорация) that owns the Russian nuclear power plants, nuclear weapons companies, related research institutes and the nuclear and radiation safety agencies. The subsidiary of Rosatom, Rusatom Overseas, and the Finnish company Fennovoima have signed a project development agreement in order to build a nuclear power plant in Pyhäjoki, Finland. Rusatom Overseas is also negotiating on 34 per cent ownership in Fennovoima.

Before 2007 Rosatom was known as Federal Agency on Atomic Energy, before 2004 as Ministry for Atomic Energy of the Russian Federation and before 1992 as Ministry of Nuclear Engineering and Industry of the USSR. Therefore it’s an important part of the Russian state system rather than an independent company. Rosatom is led by the ex-Prime Minister of Russia Sergey Kiriyenko.

The supervisory board of Rosatom is fully appointed by the President of Russia and currently includes the Russian Minister of Energy Aleksander Novak and the head of the Economic Security Service in FSB Yuri Yakovlev.

Rosatom owns and operates the nuclear export company Atomstroyexport (ASE). They have a number of reactor designs, the most prominent currently being VVER-1200, with various modifications such as MIR-1200 and AES-2006. AES-2006 is offered to Fennovoima to be built in Pyhäjoki.

In 2012, Rosatom hired Jukka Laaksonen, the former Director General of the Finnish nuclear regulatory agency STUK as its director for international development, negotiating his position while he was still in public office.

What is the motivation behind Rosatom’s aggressive enlargement?

The Russian nuclear investment programme is a state budget programme that is not related to the income from the nuclear assets. For that reason, projects do not necessarily have a priority producing economic profit, but are seen as strategic political assets.

There are several signals that seem to point that the Rosatom new build strategy's primary motivation may be political rather than commercial.

Case 1: Turkey. In Turkey, Rosatom is planning to build four VVER-1200 units. The estimated cost of the project is 4.8 billion euros per unit and the power output would be 1200 MWe for each. The state owned Turkish Electricity Trade and Contract Company has agreed to buy 70% of electricity with the price of 12.35 US cents per KWh. This would mean Rosatom would get its capital expenses barely compensated but would not be able to profit with the nuclear power plant while carrying all risks for budget overdraws completely.

At the same time, Rosatom’s full ownership in the project will essentially establish a Russian nuclear reactor on Turkish soil and a large presence in the developing Turkish electricity market.

Case 2: Bulgaria. After negotiating but never signing a construction contract under the Bulgarian Socialist Party government, a similar BOO set-up was proposed by Rosatom for the Belene nuclear power plant. This happened after the project’s strategic partner, the German energy company RWE left the project in 2009 because it received too little information about the role of the Russian partner Rosatom. Correspondence concerning this issue between RWE and Bulgarian state utility NEK was recently published by the Bulgarian government.

When the Socialist Party lost power to the right-wing Citizens for European Development of Bulgaria party (GERB), the new government set out policy measures to restrict Rosatom influence over the project. Russia tried to influence the situation with personal visits by the Premier Dmitry Medvedev and later President Vladimir Putin. GERB, however, demanded a full cost estimate, for which it hired HSBC. HSBC found out that the total cost of the project was a lot more than promised by Rosatom originally. This quickly led to the collapse of the whole project with a loud protest from the Russian government.

Rosatom international nuclear contracts

Belarus: Rosatom has contracts for building two VVER-1200 type reactors near Astravetz, 40 km from the Lithuanian capital Vilnius, but building hasn’t started yet. Rosatom will build, have complete ownership in and operate the units.

Bulgaria: Rosatom contract for Belene cancelled by current outgoing government cannot be re-initiated for the next two years. Rosatom is also looking for contract for building Kozloduy 7 & 8.

Czech Republic: Rosatom bidding for Temelín 3 & 4 project. If chosen, would offer build-own-operate contract in cooperation with Czech state utility CEZ.

Finland: Rosatom has expressed preliminary interest in supplying a AES-2006 reactor for Fennovoima as well as buying a stake in the company.

Hungary: Rosatom bidding for building two VVER-1000 type reactors in Paks. Rosatom would build, own and operate the units. It is still unclear whether the Hungarian state utility MVM would play any role in the project.

Lithuania: Rosatom has recently started lobbying for a nuclear new build contract after a negative non-binding referendum for earlier Hitachi plans. However, the Lithuanian government has not been willing to invite a bid from Rosatom.

Slovakia: Rosatom is contemplating obtaining a 49 % share in the Bohunice V3 project after Czech state owned company CEZ stepped out leaving Slovakian state owned JAVYS alone in the project.

Turkey: Rosatom is building two VVER-1200 reactors in Akkuyu with an option for two more. Rosatom builds, owns, operates and handles waste disposal for the units.

Outside Europe, Rosatom is currently in talks with at least Argentina, Armenia, Bangladesh, Brazil, China, Egypt, India, Indonesia, Iran, Jordan, Malaysia, Saudi Arabia, South Africa and Vietnam. At least the Jordan and South Africa contracts would be based on the build, own, operate model.

In addition to the foreign new build projects, Rosatom has several domestic projects that clearly aim at enforcing the Russian energy dependency in Europe.

Rosatom currently builds two VVER-1200 type reactors near Neman in the Kaliningrad enclave, which is completely surrounded by the EU. The enclave itself does not need more electricity, but together with its planned Belarusian Astravetz nuclear power station, Rosatom hopes to flood the Baltic States with its electricity (enforced by the BRELL network agreement) and at the same time export large quantities to Poland and Germany (over a planned 1000 MW link).

Another Greenpeace document on Rosatom: Rosatom risks