Minatom fights for Eastern nuclear markets, dreams about Africa

Publish date: July 20, 1998

Written by: Igor Kudrik

Last month, Russia’s Minister for Atomic Energy, Yevgeny Adamov, visited China, India, talked about possible increase in cooperation with Japan and an alternative to the KEDO program, planned to consider building nuclear power plants in Africa.

Yevgeny Adamov, head of the Russian Ministry for Atomic Energy (Minatom), was especially active last month, visiting China and India, promoting new projects and making sure the old ones were running smoothly.

Russian-Chinese co-operation
In late June, Yevgeny Adamov visited China to see the progress at the Lianyungang Nuclear Power Plant construction site, located north-west of Shanghai. The contract between Russia and China on delivering this nuclear power plant was signed on December 29 last year. The nuclear power plant will comprise two VVER-1000 reactor units, which are expected to be in operation in 2004 and 2005. The substructure of the plant is currently under construction and is scheduled to be completed by April next year.

The cost of the project is unclear. The Chinese side floats a number around $3 billion, while Russia keeps to a lower $2,5 billion. At the same time, the regular world market price for two reactor units similar in design to the VVER-1000 would be some $4 billion. The Russian officials, according to Russian daily Russky Telegraph, explain the difference by saying the amount of work performed by the Russian specialists would be between 60% and 70%. In addition, the contract does not stipulate hard currency transfers from China to Minatom. The deal was a barter agreement, obliging China to pay consumer goods, raw materials and construction materials, ship repair services etc. China will start repayments 24 months after the commissioning of the plant, with a 12-year payment schedule.

While far from being financially profitable for Russia, the deal offered Minatom a foothold in the Chinese nuclear market, where the Russian energy giant can compete successfully with American companies through price dumping.

According to a report released by the official Chinese news agency Xinhua last year, China expects its power generation to rise by 5,2% this year to 1.135 trillion kilowatt-hours. Chinese Electric Power Minister Shi Dazhen explained the power industry must maintain an annual growth rate of 5% to 6% to support economic growth.

In November 1997, the White House, under pressure from Westinghouse, ABB and Bechtel Power, cleared the way for U.S. nuclear sales to China and reached a general agreement on delivery of around 100 American nuclear generating units worth $50 billion. Prior to that policy change, U.S. nuclear suppliers were barred from selling to China due to concerns over nuclear weapons technology transfers by Beijing to Iran, Pakistan and other countries.

During his China visit, Adamov also showed interest in two Russian-built enrichment facilities in Hanzhun (Shaanxi province). The project was launched in 1992, and a contract signed in 1993. The facilities are gas centrifuges, based on gas diffusion technology. By now, the first facility has been put in operation. The second one is scheduled to be commissioned by the end of 1998. The cost of the deal is reportedly around $4 billion.

Renewed nuclear deal with India
The next stop of Adamov’s June-tour was India. On June 21, Adamov renewed an agreement with India concerning the construction of a nuclear power plant. The initial agreement was signed between the USSR and India in 1988.

Russia will deliver two VVER-1000 reactors to India. The plant will be built in Kudankulam, in the state of Tamil Nadu in southern India. According to Victor Mikhailov, Minatom’s Deputy Minister, the contract will be ready for signature in three to four months, or half a year at the latest. The cost of the deal reported to turn around $2,6 billion. As reported by the Russian daily Novye Izvestiya, answering a question why one reactor cost Iran $1,5 billion, while two in India are valued at just $2,6 billion, one of the Minatom’s officials said: "We will live without profit. What matters are jobs."

To promote co-operation with Japan, participate in KEDO program, build nuclear power plants in Africa…
While in China, Adamov was frank about his ministry’s plans for activities and expansion. In particular, Adamov regretted the absence of nuclear cooperation with Japan, promising to fill this gap in the near future. Currently, the only links Minatom has with the Japanese nuclear industry are negotiations over Russian-mined natural uranium delivery to this country.

One statement made by Adamov related to the KEDO program raised eyebrows. KEDO, the acronym for Korean Peninsula Energy Development Organization, is a trilateral program between Japan, the U.S. and the South Korea. It is aimed at constructing a light water reactor power plant in the Republic of North Korea, to put the country’s nuclear program on civilian tracks. Adamov proposed an alternative to KEDO, suggesting to build a nuclear power plant in the Russian Far East, to export energy to North Korea. According to Adamov, this would help to reduce KEDO’s cost and would at the same time be beneficial for the Russian Primorsky region, which shares a border with North Korea and China.

At the end of his trip, Adamov made a statement concerning the plans for Minatom’s expansion in the future. Minatom’s boss has big plans for African countries. According to Adamov, Africa will not be pure business. There, Minatom would act as a peacemaker. Adamov explained that all wars have their roots in the fight for the right to control fossil materials. Promoting nuclear energy Minatom would therefore de facto help to maintain peace in the area.