How Rosatom conquers East Europe

How Rosatom conquers East Europe

10-12 billion dollars. This is the minimum amount of the largest transaction in the history of the Czech economy in recent years – the construction of two reactors of the Dukovany nuclear power plant in the south-east of the country. The main contender for the title of the contractor is the Russian concern Rosatom. “Dukovany” may become another link in the chain of foreign transactions of Rosatom, which turned it into a sort of “atomic empire.” Nuclear power is gradually becoming no less important than gas supplies, a lever of Russian influence in Europe.

The sale of the reactor brings more money than the export of oil or gas, because it is usually accompanied by a variety of other services: nuclear fuel supplies, training of local engineers and technicians, and regular consultations.” Each nuclear power plant is a multibillion-dollar project, not dependent on the jumps in the commodity market, and at the same time he connects the consumer with long-term relations with Russia. ” At the moment Rosatom, judging by its report for 2017, established such relations with more than 50 countries. “The portfolio of foreign orders for a 10-year period amounted to US $ 133.5 billion,” the company notes proudly. Objects that are already underway or will soon start working are in Belarus, Egypt, China, Saudi Arabia, Turkey … But Europe is given special attention.

Rosatom wanted to enter the Czech market in 2014, when a tender was being prepared for the construction of two new reactors for another nuclear power plant, Temelin. Since the case was immediately after the annexation of the Crimea and the beginning of the conflict in the east of Ukraine, the head of the supervisory board of the Czech energy company ČEZ, Vaclav Paches, stated that he did not imagine that Russia could get a contract for such construction in the Czech Republic: the risks associated with this in the national security. But 4 years passed, the Temelin tender was canceled due to financial problems, the ČEZ management was replaced, like the Czech government, headed by a billionaire with an ambiguous reputation Andrey Babish, the leader of the populist movement ANO. The project of reconstruction of the Dukovany nuclear power plant, whose old Soviet reactors should be decommissioned no later than the mid-2030s, came to the forefront. And this time the chances of Rosatom to get a contract are very high: the head of the Czech state Milos Zeman himself is lobbying for him.

In the meantime, the Russian nuclear concern “rolled” in Hungary a model for financing its projects in Europe. Having concluded an agreement with the government of Victor Orban on the modernization of the Hungarian NPP “Paksh-2”, Moscow offered to pay 10 out of 12.5 billion euros of the value of the contract at the expense of the state loan it provided. Hungarian loans should be repaid within 21 years, and in part – at the expense of the EU’s subsidies received by the country. This, however, was not very pleasant for some of Hungary’s neighbors: Austria, which belongs to the nuclear power industry with great skepticism, filed a lawsuit with the European Court seeking to abolish the sponsorship of the Paksh-2. In addition, in Brussels dissatisfied with the lack of transparency of the transaction.

Now Russia offers the Czech Republic a similar scheme: Rosatom will rebuild the Dukovany nuclear power plant without any tender – on the basis of a direct intergovernmental agreement, with the financing of construction at the expense of the loan provided by Moscow. Such generosity is due to the fact that for Russia such projects are not only economic, but also strategic: the combination of Rosatom’s international successes, the decline of its rivals, the pro-Russian president in Czech Republic.

Rosatom is certainly a priority choice for a number of Czech politicians. President Miloš Zeman made it clear that he would like Rosatom to receive a contract for the construction of reactors in Dukovany in the form of an intergovernmental agreement, as in Hungary. In this case, no tender is conducted.

Prime Minister Babish should receive a detailed conclusion from the Ministry of Industry  from experts who are developing the draft of this intergovernmental agreement. This is the option that is more beneficial to Rosatom. Another commission has been set up in the same ministry, which is considering a nuclear deal from the point of view of possible threats to national security. Experts predominate in this commission, which indicate the risks associated with Russian and Chinese contract applicants, and are skeptical of the option with an intergovernmental agreement. The prime minister will also receive the conclusion of this commission in the near future – and the decision will be further behind him.

Meanwhile, Rosatom is preparing to resume work at Belene NPP in Bulgaria. This project was frozen in 2012, and the Bulgarian National Energy Company had to pay Rosatom, already started work, a huge penalty. But this year the Bulgarian government suddenly decided to resume construction and invited Russia to participate in the project. And on Monday, September 3, Rosatom, in the person of the head of his international department, Boris Arseev, conducts a presentation of new projects of the company in Belgrade. It is not excluded that the accession of new provinces to the Russian “atomic empire” is being prepared.

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.