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Russian Atomic Energy Chief Details Plans for Flotation of Nuclear Energy Firm

Posted on: Saturday, 24 September 2005, 18:00 CDT

The head of the Russian Federal Agency for Atomic Energy (Rosatom), Aleksandr Rumyantsev, has outlined the work to float the state-run enterprise in charge of nuclear power plants. In a wide- ranging interview to the Russian newspaper Nezavisimaya Gazeta, Rumyantsev said the floatation will make it possible to attract private investment to building nuclear power plants and that will, in turn, allow Rosatom to focus on fundamental tasks. The following is the text of the interview conducted by Andrey Vaganov, entitled "Rosenergoatom is being floated. The nuclear energy sector is eager for loans, investment and other attributes of the market" and published by the newspaper Nezavisimaya Gazeta on 19 September; subheadings inserted editorially:

In the middle of September the work of the interdepartmental working group for the reform of the Rosenergoatom state-run concern reached a decisive phase. What will be the consequences of such a change in the organizational-legal form of the concern? How will that affect the investment attractiveness of atomic energy? The chairman of the interdepartmental working group and CEO of the Federal Agency for Atomic Energy, Aleksandr Rumyantsev, answered these questions in an interview with a Nezavisimaya Gazeta correspondent.

Flotation of Rosenergoatom

[Correspondent] Aleksandr Yuryevich, at what stage is the conversion of the Rosenergoatom concern to a joint-stock company right now? What form of floatation was chosen in the end?

[Rumyantsev] We have been preparing the flotation of our concern Rosenergoatom, a company that controls all the nuclear power stations in Russia, for several months at the brain-storming level. A coordinated decision has already been taken, that this will be an open joint-stock company, in which 100 per cent of the shares will belong to the state.

[Correspondent] Then what will change from this flotation?

[Rumyantsev] Quite a lot will change. A market mechanism is being added. Real prospects for attracting investment, for working with bankers are appearing... [newspaper's ellipsis] As a result the work of Rosatom is reaching a new level: from small guardianship - to concentration on large-scale fundamental initiatives, for example, what reactor design is to be considered promising in the future.

Major plans

[Correspondent] What kinds of strategic tasks are there?

[Rumyantsev] Right now the most important one for us is to maintain the rate of introducing new generating capacity - a gigawatt per year, in order to reach 230bn kWh by 2020. This is written into the general energy strategy. We are not diverging from it now. However our main problem is not technical, it is rather one of attracting money. We are not making any claims for budgetary injections, on the budget surplus or on the Stabilization Fund. We are prepared to obtain loans that must be repaid. I think that turning Rosenergoatom into a joint-stock company will make this procedure easier and we are pushing forward.

[Correspondent] By the way, as far as I know, Rosatom has drafted a detailed plan of borrowing from Sberbank [Savings Bank]. It was a matter of providing a loan for the construction of the second generating set of Rostov nuclear power plant. What were the results of these talks?

[Rumyantsev] Interest has been shown on the part of financial organizations such as Sberbank and Vneshtorgbank [Foreign Trade Bank] and they are also ready to provide such loans. However, in a market economy it is not customary to provide loans against state property. All risks, as they say, should be hedged, that is there should be some kind of protection from certain risks... [newspaper ellipsis]

[Correspondent] But for example, YeES [Unified Energy System] is a joint-stock company and where is the flow of investment?

[Rumyantsev] Today we are in a situation where it is even impossible for us to take technological loans. Therefore I am not deluding myself that a flow of investment will pour in. However, the launch of the second nuclear power generating set at Volgodonsk nuclear power plant in 2001 and the third generating set at Kalinin nuclear power plant in 2004 - and this means two gigawatts of set capacity - forces large banks to turn their attention to investing funds in the nuclear energy sector and look at constructing such complex facilities as nuclear power plants.

State controlled tariffs

[Correspondent] Were these generating sets launched using solely Rosatom's resources?

[Rumyantsev] It was done using the economic activity of the Rosenergoatom concern. Here one must note that the whole tariff for energy produced by nuclear power plants is divided into nearly 20 articles, we live in a strict state economy. We will continue to live under it because the tariff will all the same continue to be set by the state. The price for nuclear fuel, which the TVEL concern will be selling to Rosenergoatom, is also set by the state. In general we have little freedom for manoeuvre.

[Correspondent] Then where is the market here?

[Rumyantsev] The fact of the matter is that 10 per cent of the electricity produced by us is sold in the free market. Right now we are the undisputed leader there, because after hydroelectric power, ours is the cheapest. There is great demand for our energy.

Storage of spent nuclear fuel

[Correspondent] You said that one of the major tasks facing the entire sector is not to lower the pace of bringing electric generating capacity online. However all the same it is known that up to now the problem of handling spent nuclear fuel has not been solved in principle. The Federal Service for Ecological, Technological and Nuclear Monitoring has more than once paid its attention to the serious situation with storage sites for nuclear materials, which are attached to power plants. How do you view the prospects for solving this issue?

[Rumyantsev] It is true that our storage sites attached to power plants are close to being full: We have a reserve of two and a half years. For about a year we have been expanding storage at power plants and are building a new facility in Krasnoyarsk for the dry storage of spent nuclear fuel. The solution of these two tasks will allow us to be sure of the situation in our nuclear energy complex for the next 70 to 80 years.

I will tell you honestly. Even storing vitrified nuclear waste and spent nuclear fuel with our enormous territories, with the qualifications that our specialists have, and bearing in mind the processes of the conversion of nuclear towns, when defence problems are coming to an end and people need to have some kind of employment - this task does not appear to be extremely difficult. We can completely guarantee safe and effective (including from the point of view of terrorist threats) storage.

[Correspondent] In what time frame are you planning to begin dry storage in Krasnoyarsk?

[Rumyantsev] In three to four years. As far as storage facilities attached to power plants are concerned, I think that the work will be completed in one and a half to two years.

[Correspondent] Are there any difficulties in the coordination of necessary documents for floating Rosenergoatom? When are the first decisions regarding flotation expected?

[Rumyantsev] When decisions are being taken regarding such a serious issue, one can never say that everything is going smoothly. Even when colleagues gather together a great number of points of view are expressed. And this is right. Since 15 September we have been working in the mode of holding two meetings a month.

By now we have already obtained the consent of all departments which the state had instructed to be involved in the work on this issue. This is with the exception of the Russian Federation Ministry of Economic Development - they still have many concepts. This is completely right: they are looking at the macroeconomic figures; they are analysing in a great majority of cases what will occur when there is a flotation. Nonetheless, I am looking to next year with optimism, when all of this will be implemented.

Source: BBC Monitoring Former Soviet Union

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