Atucha III is a no go

Atucha III is a no go

The president of Nucleoeléctrica Argentina, Rubén Omar Semmoloni, informed the managers of the company on Tuesday that the government finally decided not to build the Atucha III nuclear power plant, which was to be financed with a loan from China. The start of the work had been postponed since Mauricio Macri took office in December 2015, but the authorities said several times that the plant was going to be carried out. Now the novelty about the cancellation of the project was leaked to the press through the Cabinet office, but no official confirmed it publicly. Sources of Nucleoléctrica assured that some 600 workers would lose their jobs, the vast majority of those that make up the Nuclear Project Management Unit that was to be in charge of the work.

The agreement with China was closed by the government of Cristina Fernández de Kirchner. On July 18, 2014, the Minister of Planning, Julio de Vido, signed with the director of the National Energy Administration of China, Xu Xinxiong, a cooperation agreement for the construction of a fourth and a Fifth units, which were to be added to Embalse, Atucha I and Atucha II. From then on, details began to be negotiated and on November 15, 2015 both countries signed the technical and commercial agreements of Atucha III to be installed in Lima, Zarate, in the Turkish city of Antalya. In addition, in that meeting the final version of the framework contract was agreed by the fifth nuclear unit.

Atucha III was going to be a and heavy water reactor (HWR) to take advantage of the experience and resources that the country has in that area after completing Atucha II. However, the main interest of the Chinese was to sell to the country their pressurized water reactor (PWR), the Hualong One. To settle both parties, the agreement included Chinese financing for the construction of a the Unit 4 based on a 760 MW HWR and Unit 5 would be a Hualong of 1000 MW. The construction of both was to raise to 10% the contribution of nuclear energy to the electrical system, which currently barely exceeds 6%.

Initially, work was scheduled to begin in 2016, but after the change of government, Energy Minister Juan José Aranguren and the area’s undersecretary, Julián Gadano, confirmed that there would be no news that year because the contracts were being reviewed.

As part of that review, at the end of 2016, Argentina proposed to advance first with the plant that generates the least interest for the Chinese and postpone for two years the one that most appeals to them. It did not seem like a very tempting offer for the Chinese and, as expected, it did not prosper. Despite this, the government continued saying that the project was underway and even in April they leaked that the contract with China for the construction of Atucha III had finally been signed. A month later, to avoid a US $ 12.5 billion debt with China, it was reported that the project was cancelled, despite the fact that the agreement provided for a grace period that allowed to start paying China only when Atucha III was operating. The total amount of the construction was US $ 14 billion, of which China was going to finance 85%. The news fell like a bomb in the Zárate area, where the population expected to benefit from the economic reactivation of construction.

The crisis in the nuclear sector, which began with this government, will be worsened from now on, since the dismissals expected at Nucleoléctrica will be accompanied by a deepening of the conflict at the Arroyito Industrial Heavy Water Plant, a state company that was set up since last year and focused on the construction of Atucha III.

About Author

Arnaud Lefevre

Arnaud Lefevre is the Chief Executive Officer of Dynatom International. Arnaud is in charge of the international development of the business portfolio.

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