Why is Rosatom so eager to go abroad?

Why is Rosatom so eager to go abroad?

The plans of the state corporation in the domestic market have already been adjusted and now only five large blocks are being actively built in Russia. But Rosatom fears complications for its foreign projects, which have now become one of the main directions for the development of the state corporation.


At first glance, the change of management of Rosatom looks almost a formality, and the task of the new head of the state corporation, Alexei Likhachev, is to maintain what was built and achieved. However, during the last ten years under the ex-general director Sergey Kiriyenko, Rosatom had to go through a number of difficult periods and sharp changes in the direction of development. Whether the new leadership will cope with similar twists and turns will depend not least on its hardware weight and relations with the budget.


The change in leadership of Rosatom, which was officially announced on October 5, was externally as smooth as possible. Moved to the Kremlin, Sergei Kiriyenko was replaced by the first deputy minister of economy, Alexei Likhachev, which, apparently, guarantees the continuity of style in the management of the nuclear industry. Mr. Likhachev was unofficially considered a good acquaintance of the ex-CEO (and he himself already confirmed this), no fundamental differences in the positions of the two managers were reported. Moreover, the new management scheme of Rosatom, in fact, suggests that Sergei Kirienko becomes a kind of curator of the industry, which retains a significant influence on at least key political decisions.

On the one hand, contractors were promised the volume of orders – the growth of the foreign portfolio for a ten-year period to $ 150 billion. On the other hand, Rosatom’s policy on cutting costs was confirmed: Alexei Likhachev said that since 2009, the system of competitive purchases saved 500 billion rubles. That is all, as under the previous government: orders will be, but we do not want to overpay.


Alexei Likhachev said directly about the current structure of the state corporation: “For ten years, entire production holdings were recreated or returned in the control system of Rosatom: the uranium division, the group of nuclear engineering companies, the engineering company.” They closed the production chain that in 2005, without these key links fell apart. ” The top manager added that “long-term strategic planning allowed Rosatom to see the risks and timely reorient nuclear power to the export direction.” According to him, now there are few companies in the country that would have a development plan for a period of up to 100 years, but in Rosatom such a plan, at any rate, “a strategic vision, in which direction to develop,” is a reality.

The reorientation to export, which is so pleasing to Alexei Likhachev, is also not among the initial long-term strategies. On the contrary, the state corporation was created for internal purposes – the massive development of nuclear power plants in the country. But expectations did not materialize, and they had to change on the move. “The large program for the construction of a nuclear power plant in Russia was guided by the forecast for a rapid increase in demand for electricity and the withdrawal of old facilities,” Kirill Komarov, first deputy general director of Rosatom, explained to Kommersant. “The lion’s share of orders had to be in the Russian construction – one or two units in year, and foreign projects should have been a pleasant addition. ” If the calculations turned out to be correct, and the development of the economy preserved the pace of the 2000s, now, apparently, Rosatom would be something like  a federal energy holding company with a nuclear power plant that occupies up to a third of the Russian energy market, which also includes engineering, fuel production and several foreign projects at the periphery of its main interests. “But by 2010-2011 it became clear: we need new units in Russia to replace those that are out of operation, but there is not a rapid increase in energy consumption, which requires a huge number of new capacities,” Komarov said.


The future development of RosAtom is also highly dependent on whether the state is ready to continue supporting the nuclear industry and to what extent.

But with financial support for the key element of the current strategy of Rosatom – the construction of nuclear power plants in Russia and abroad – problems may arise. Most of the foreign projects are now paid for by the Russian budget – state loans (Egypt, India, Hungary, Belarus, etc.), the National Welfare Fund (Finland), direct inflows (Turkey). It is relatively easy to protect the allocation of these funds: in fact, we are talking about related loans that subsidize the Russian economy, since most of the money is returned to the country as payment for the services of domestic suppliers and contractors. But on the whole, Moscow’s ability to divert billions of dollars into such a long-term investment on a previous scale raises more and more questions.

The results of the struggle for state funds will depend on the budget possibilities, both on the administrative weight of the management of the state corporation, and on Sergei Kiriyenko as curator, and on how, for example, atomic scientists play a social card.

As a result, Rosatom regularly has the same problems as metallurgists or mining companies: with a decline or loss of production, closing down the enterprise is almost impossible: the dismissed employees simply will not find a new job. For the state corporation, which employs about 250 thousand people, the argument about state support for the development of high-tech monocities in order to preserve the social world is working.

Source: Kommersant

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Arnaud Lefevre

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