Chinese investment in Romanian nuclear plant

2 November 2015

The shareholders of Romanian national nuclear company Nuclearelectrica have approved an agreement with China General Nuclear Power Corporation (CGN) on the development, construction, operation and eventual decommissioning of two new units (3&4) at the Cernavoda NPP.

Ownership of the plant is divided among the Romanian energy ministry (82.48%), Romanian investment fund Fondul Proprietatea (9.10%) and 'other investors' (8.42%). Fondul Proprietatea has been trading on the Bucharest Stock Exchange since January 2011.

Romania and China signed a letter of intent in November 2013 as well as numerous bilateral agreements, including a memorandum of understanding (MOU) on the peaceful uses of nuclear energy. The Romanian government approved the MOU in September 2015.

Daniela Lulache, Nuclearelectrica CEO, said the Cernavoda project is a priority investment decision, which will "on the one hand, ensure long-term security of supply, energy independence, a balanced and stable energy mix capable of meeting de-carbonization targets; and, on the other hand, enhance the value of Nuclearelectrica's assets and improve its financial growth".

The next stage will involve negotiating and completing an Investors Agreement and Articles of Incorporation, with a view to setting up a new project company for the construction and completion of Cernavoda 3&4.

Cernavoda hosts two operating Candu 6 pressurised heavy water reactors supplied by Atomic Energy of Canada Ltd and built by a Canadian-Italian consortium of AECL and Ansaldo. Unit 1 started up in 1996, but work was suspended on a further four units in 1991, with unit 2 eventually beginning operation in 2007. Efforts to resume work on Cernavoda 3 began in 2002, and a new project company, EnergoNuclear, was established in 2009 to oversee the completion of units 3 and 4. Initial partners GDF Suez, CEZ, RWE Power and Iberdrola subsequently withdrew, and the company is currently 84.65% owned by Nuclearelectrica, which has been seeking new investors.

In July 2014, reactor manufacturer Candu Energy said the two planned units would also be Candu 6 reactors, nearly identical to the existing units. The company also said it had signed an "exclusive and binding" agreement with China Nuclear Power Engineering Company, a subsidiary of CGN, to cooperate on the construction of Cernavoda 3&4.

Under the new arrangement, Nuclearelectrica will contribute €2m ($2.2m) for 49% of the joint-stock company that will build the new units and CGN will have 51%. The document stipulates that CGN's participation in the share capital of the joint-stock company will represent at least 51% and Nuclearelectrica's will not fall below 30%. CGN will take over the value of Nuclearelectrica's investment in its subsidiary EnergoNuclear (EN) through a merger by absorption.

The project for the two new reactors was valued at €6.45bn last October, but the feasibility study is to be revised.

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