An independent analysis shows no less than $90 bn of Russian state money is being infused for purposes of gaining political influence into the Russian state nuclear corporation’s questionable reactor projects abroad—and this amount may rise by a third yet.
The Russian environmental group Ecodefense today published its second independent report on planned and ongoing construction of Russian-designed nuclear power plants in foreign countries. The report, Russian Reactor Export: 2020, is prefaced with searing criticism of Rosatom’s activities by the former Russian deputy energy minister Vladimir Milov.
Rosatom claims it is building 36 reactors around the world and that the total value of its foreign nuclear orders exceeds $130 bn. A close study of the information available on Rosatom’s projects reveals, however, that as of May 2020, Rosatom only had contracts for 21 new reactors abroad. Additionally, Rosatom is participating in the construction of four nuclear reactors in China, but the much lesser value of those deals—compared to the average reactor construction contracts Rosatom has already secured or expects to land—indicates the corporation’s role there is that of equipment supplier rather than primary builder. And even with the Chinese reactors factored in, Rosatom has 30 percent fewer actual foreign reactor orders than its officially stated 36-unit portfolio.
Of these, only eight reactors are in an active construction stage. Last year, construction work started on the second unit of the Iranian Bushehr plant. The remaining seven were already being built in 2018.
At least one reactor—the first unit at the Ostrovets plant in Belarus—is likely to leave this list of units under active construction in 2020: Its commissioning is scheduled for later this year. The roster may also be expanded with new units in Egypt, China, and Turkey, but the continuing coronavirus pandemic makes any accurate forecasts on expected construction start near impossible.
In 2019, Rosatom did not ink any new contracts for nuclear power plant construction abroad, but it made headway in preparing three projects which, while planned, so far lack contractual obligations. In Bulgaria, the corporation is one of the contenders for a $10 bn nuclear power plant deal. In Saudi Arabia, Rosatom said it has successfully completed a prequalification phase and expects to take part in the tender process this year or next. Preparations are in place to sign a contract with Uzbekistan, possibly to come into force already in 2020. If all three contracts are secured, Rosatom will add six more reactors to the number of units planned for construction, which may require additional loans provided by the Russian government, to an estimated value of $33 bn.
As of early 2019, the Russian state had at least $90 bn in federal budget funding pledged to foreign reactor projects. In most of these, the interest rate on state-backed loans does not exceed 3 percent, which means significantly more favorable terms for a prospective customer country than credits offered by private banks.
According to Ecodefense’s report, efforts to attract foreign investment into Rosatom’s reactor ventures abroad are floundering. In Turkey, where active—and unsuccessful—attempts have been made over several years to secure investor funding, the Russian state bank Sberbank said last year it would provide Rosatom a loan toward the construction. Possible involvement of the state development corporation VEB.RF (formerly, Vneshekonombank) has been mentioned with regard to the project in Uzbekistan. Promised investments thus turn out to be just more examples of reactor projects abroad being infused with Russian state funding. Earlier, money from the National Wealth Fund—a key element of the Russian pension system—was used to finance the much-delayed Hanhikivi project in Finland. Plans have been discussed to tap into that fund for the project in Egypt as well. All of this demonstrates how extremely unpopular nuclear energy remains with independent investors. “Evidently, Rosatom’s projects are only feasible in an environment of unfettered access to the Russian federal budget and a lack of efficient oversight over the expediency of state spending,” the report concludes.
“In Russia, this [foreign reactor construction funding] scheme has evolved into a well-oiled business of siphoning money out of the taxpayer’s pocket: Projects rejected by the market are being financed by state banks, with the costs then covered at our expense,” Vladimir Milov, the former Russian deputy energy minister, writes in his foreword to the report.
“Russia is allocating unprecedentedly enormous amounts to finance Rosatom’s projects abroad—and the only return the Russian taxpayer will receive on these investments is nuclear waste. The absence of any investors but the Russian state clearly shows that these projects are economically unsound and are undertaken for the sake of political influence. Today, when Russia needs its resources to survive the ruinous economic crisis caused by the pandemic, foreign reactor projects paid for by the Russian public must be stopped,” said Vladimir Slivyak, the lead author of report and co-chair for Russian environmental group Ecodefense.