Russia says it can pay for Turkey’s first nuclear plant by itself

An engineering schematic of the Akkuyu Nuclear Power Plant.
An engineering schematic of the Akkuyu Nuclear Power Plant.
JSC Akkuyu Nuclear

Publish date: April 9, 2018

Russia’s energy minister has said Rosatom, the country’s state nuclear corporation, is prepared to finish Turkey’s first nuclear power plant all by itself, despite assurances from the company that it would draw investors to finance nearly half its cost.

Russia’s energy minister has said Rosatom, the country’s state nuclear corporation, is prepared to finish Turkey’s first nuclear power plant all by itself, despite assurances from the company that it would draw investors to finance nearly half its cost.

Construction of the plant, which is slated to feature four of Rosatom’s VVER-1200 reactors, began last week when Russia’s Vladimir Putin and his Turkish counterpart Recep Tayyip Erdogan observed a ceremonial pouring of cement from Turkey’s lavish presidential palace.

But the high profile political event immediately trigged questions about where the remaining 49 percent of investment to complete the plant was going to come from after a Turkish consortium backed out of the project in February.

On Friday, Alexander Novak, Russia’s energy minister, answered that question, telling reporters that Moscow would simply cover the shortfall should Rosatom’s troubled efforts to draw investors fail.

“Already, $3 billion have been invested,” Novak said on Friday, according to Reuters. “If they won’t find an investor, it means that the plant will be built by Akkuyu Nuclear,” the Rosatom division responsible for the plant’s construction.

While Novak said the hunt for investors was still on, Moscow’s apparent willingness to take the rest of the plant’s construction on itself was surprising, especially in the wake of promises Rosatom has made to finance part of the plant locally.

On Friday, Novak reiterated that Russia would prefer to find Turkish investors to finish the plant, especially groups in which the Turkish government has a stake. But it remains unclear how the already protracted search for capital will affect the projected startup date of the plant, or the final cost for the project.

At present, Akkuyu’s first unit is projected to come online in 2023, with three more reactors to follow in 2025.

akkuyu A rendition of the Akkuyu Nuclear Power Plant. Credit: Rosatom

Friday isn’t the first time Moscow has proposed to built the Turkish plant on its own funding. When the original memorandum of understanding on the plant’s construction was signed in the early 2000s, the Turkish government itself said projected returns on the energy it would produce were too low to warrant its investment.

Rostom was poised to finance the project on its own, but a downturn in the Russian economy put the plant on hold.

But last year the Turkish government – whose authoritarian regime is on warm terms with Putin – stepped back into the deal with a promise to drum up investment, and declared the nuclear power plant a “national priority.”

Still, the terms didn’t appeal to two of its main investors – the Turkish firms Kolin and Kalyon – who announced their departure from the project in February. Some observers have suggested the next step for the hard-line regime in Ankara might be to just force investors to participate.

Until that happens, however, it leaves Rosatom in an uncomfortable position in which has found itself in before  – with a plant it has promised to build whether it has foreign investors or not.

That plan had worked poorly in the past. In 2011, efforts to corral investors behind the Baltic Nuclear Power plant, which was slated for the Russian enclave of Kaliningrad, sputtered when investors from Poland fled the project.

Further afield in South Africa, courts have stopped multibillion dollar Russian-built Russian project over allegations of corrupt dealings with the government in Johannesburg

In neighboring Belarus, a VVER-1200 construction project has been skewered by the governments of Lithuania and Poland after a series of potentially catastrophic mishaps at its construction site.

At one point, workers dropped the reactor’s 330-ton pressure vessel, and Rosatom was forced to replace it. Ironically, the dropped vessel had initially been built for the defunct VVER-1200 project in Kaliningrad.

The Turkish plant is opposed by local environmentalist because of the earthquake-prone corridor on the Mediterranean coast on which it lies. There could be deeper defects as well. Russia’s VVER-1200 has experienced hiccups at home, and about which Rosatom has been less than forthcoming.

After Russia’s very first VVER-1200 reactor went into service at the Novovoronezh nuclear plant, it was shut down for two and a half months after it short circuited.  Rosatom sought to obscure the circumstances of this breakdown for week until admitting it was undertaking mechanical upgrades of the reactor.

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