Russia seeks to broaden European supply chain as Hungary makes case for Paks

Rosatom has the strategic aim of attracting European suppliers of nuclear power equipment and services to its foreign and domestic projects, its first deputy director general, Kirill Komarov, said today at a conference in Budapest. Following him at the podium, a Hungarian government official reassured potential suppliers that the Russia-backed Paks nuclear power plant expansion project meets European Commission rules.

Rosatom has the strategic aim of attracting European suppliers of nuclear power equipment and services to its foreign and domestic projects, its first deputy director general, Kirill Komarov, said today at a conference in Budapest. Following him at the podium, a Hungarian government official reassured potential suppliers that the Russia-backed Paks nuclear power plant expansion project meets European Commission rules.

Komarov (left) and Aszódi at Atomex-Europe 2015 (Image: WNN)

Opening the Atomex-Europe 2015 conference and exhibition in the Hungarian capital, Komarov said Rosatom wants to provide its customers for the construction and operation of nuclear power plants "with the most competitive, most effective, most efficient solutions". The Russian state nuclear corporation "doesn't just want this, it's a part of our global strategy" to have a broad supply chain, he said. Rosatom's projects are an opportunity for European companies "to apply their technologies", he said.

More than 80% of all the non-Russian suppliers to Rosatom this year are from Europe, Komarov said. It has procured goods and services in 2015 worth more than €12 billion ($12.7 billion). About one-third of that total is for its foreign projects. It plans to increase the figure to €14 billion next year and 60% of this will be for its foreign projects.

Russia's foreign order book now totals 34 reactor units, following the signing this month of an intergovernmental agreement with Egypt, Komarov said.

Its portfolio for the next 10 years has a value greater than $100 billion, a figure that will "significantly increase" with the signing of new contracts before the end of this year, he said. Covering the entire nuclear supply chain and the whole life cycle of nuclear power plants on its order book, Rosatom's portfolio is worth more than $300 billion, he said.

Previously, only Russia-registered companies could supply Rosatom's domestic projects, he said, but it will be possible for foreign companies as well.

Hungarian project

Attila Aszódi, the Hungarian government commissioner for the Paks nuclear power plant expansion project, urged delegates at the conference to reach out to Rosatom during the Atomex event.

For the Paks II project, "Hungary has a turnkey contract with Rosatom under a fixed price, according to which suppliers to the new units will be the responsibility of the Russian partner," Aszódi said. "That's why it is so important that Rosatom has organised this conference here."

An intergovernmental agreement signed in early 2014 would see Russian enterprises supply two VVER-1200 reactors at Paks, as well as a loan of €10 billion ($10.5 billion) and €12 billion ($12.7 billion) to finance the majority of the project.

"Rosatom has the opportunity to meet Hungarian suppliers and assess their potential so that it can lay down a network of partners. It's worth mentioning that, in the intergovernmental agreement, the proportion of Hungarian suppliers for the Paks expansion project is to be 40% and we hope this event will help Rosatom find suppliers and thus achieve that 40%."

Aszódi noted the extensive media coverage recently regarding the European Commission's scrutiny of the Paks II project.

On 19 November, the Commission announced it had started legal action against Hungary over the contract it awarded Rosatom for the Paks II project, expressing concerns about its compatibility with EU public procurement rules. Hungary first notified the Commission of its plans to sign an agreement with Russia for the project in late 2013.

Then, on 23 November, the Commission said it had opened an in-depth state aid investigation into Hungary's plans to provide financing for the construction of two new nuclear reactors in Paks. The Commission said it will in particular assess whether a private investor would have financed the project on similar terms or whether Hungary's investment constitutes state aid.

Aszódi said today: "We are convinced that this project can be implemented without any government funding and instead under market conditions. That's why we are looking forward to the EC's investigations [and] we continue to be open to dialogue with them."

European Atomic Energy Community (Euratom) - the nuclear watchdog of the European Union - approved a contract between Hungary and Russia on nuclear fuel supply for the Paks II expansion project in April. Then in September, Hungary received confirmation from the European Commission that the project meets the objectives of the Euratom Treaty - notably Article 41. Article 41 of the Euratom Treaty requires that persons and undertakings engaged in certain industrial activities communicate to the Commission investment projects relating to new installations and also to replacements or conversions.

Aszódi said: "Concerning the procurement terms, the position of the Hungarian government is in accordance with the Euratom Treaty. Hungary has the right to conclude contracts with third countries. Before signing the [fuel] contract, it was shown that Hungary was complying fully with Euratom requirements. If the EC sees it is necessary to amend something [in the contract], then we'll discuss that with them."

Aszódi said Hungary still expects to be able to start construction of the new units at Paks in 2018 as planned.

He reminded delegates that the COP21 talks are to start in Paris this week, where the important role of nuclear power among "carbon neutral, CO2 emissions free electricity generators" will be highlighted.

"We have an increased role to play in the future," he said. "It is very important that we have not only renewable energy, but also nuclear," to achieve the targets for limiting the global increase in temperature to 2°C by limiting the concentration of greenhouse gases in the atmosphere to around 450 parts per million of CO2. "In 2030, the existing Paks units will stop operations and we would like to replace them with new nuclear power units," he said.

At a press briefing on the sidelines of the conference, Komarov stressed that Rosatom is "not a party to the proceedings between the EU and the Hungarian government on issues related to the construction of the second phase of the Paks plant". It is not part of the consultations between Budapest and Brussels, he said.

Researched and written
by World Nuclear News