Possible bankruptcy ruling against Balakovo NPP

Publish date: December 11, 1998

Written by: Thomas Nilsen

The Russian State Tax Service has frozen the assets of Balakovo nuclear power plant. The plant faces a possible court bankruptcy proceeding. At the same time, Minatom calls for criminal investigation into alleged corruption at Rosenergoatom, the company that runs all Russia's nuclear power plants.

"Formally, the claims that the State Tax Service has filed against us are absolutely legitimate," says Pavel Ipatov, general director of Balakovo nuclear power plant in an interview with Moscow News. In response to the latest move from the tax authorities, Balakovo nuclear power plant now threatens to bankrupt nine customers who haven’t paid anything this year. Balakovo nuclear power plant declines to pay taxes to the federal budget and part of its taxes to the regional budget. The amount due is 104 million rubles, and in addition they have received a penalty of 21 million rubles. At the same time, the consumers owe the nuclear power plant more than 310 million rubles.

Balakovo nuclear power plant operates four VVER-1000 reactors, all of which are in operation this winter. The power plant is located in the southern part of Russia.

Frozen assets may compromise security
It was in the last week of November that the Balakovo tax police arrived at the nuclear power plant with a warrant to freeze its properties. The list of assets includes computer control systems, transportation trucks and cars, the plant health centre and goods stored at warehouses.

"The implications of this move were not thought through. Does anyone realise what it means to freeze a nuclear power plant whose operation is based on a continuous technological cycle?" asks Pavel Ipatov.

"This measure was forced by the refusal of the nuclear power plant management to pay taxes to the federal and regional budget," says Valentina Popova, head of the Balakovo tax police in a comment to Moscow News. The tax police is ready to take the case to court, opening bankruptcy proceedings if necessary. It would not be the first Russian nuclear power plant to face a bankruptcy ruling.

In October this autumn, the regional Arbitration Court in St. Petersburg agreed to open a case against the Leningrad nuclear power plant, because of a $317,000 unpaid bill. Some weeks later the Arbitrage Court ordered a financial analysis of the Leningrad nuclear power plant, and the bankruptcy case is delayed until January next year. In fact, all the nine civilian nuclear power plants in Russia are in the same economical situation as Leningrad and Balakovo. They cannot pay their bills and taxes because the consumers of the energy have no possibilities to pay for the electricity they use. All in all, the consumers’ debt to Russia’s nuclear power plants is more than $3 billion.

Corruption and embezzlement
At the same time as most nuclear power plants are on the brink to bankruptcy, the state owned company that operates the NPPs, Rosenergoatom, may find itself under criminal investigation. At a news conference in Moscow on Wednesday, Minatom Minister Yevgeny Adamov said he has sent a request to Prosecutor General Yury Skuratov, asking him to look into the thefts of millions of dollars from Rosenergoatom, writes The Moscow Times. Adamov said that Rosenergoatom officials were stealing money using complicated barter deals and promissory notes instead of cash. This makes it difficult to track and leave room for corruption.

"The greater portion of money has not surfaced. It simply disappeared in the swamp of endless barter deals," Adamov said to journalists. Rosenergoatom’s nuclear power plants generate 16 percent of Russia’s electricity, but less than 7 percent of the deals are agreed in cash. The rest are barter agreements, making the values involved very difficult to trace afterwards, especially in a time when nearly nothing is paid on time.

During the last two years there have also been many protests by unpaid nuclear power plant workers.