Russia holds suppliers forum in Hungary

1 December 2015

Kirill Komarov, first deputy director general of Russian state nuclear corporation said Russia's global strategy is to have a broad supply chain and that Rosatom's projects are an opportunity for European companies "to apply their technologies". He was addressing the opening the Atomex-Europe 2015 conference and exhibition in Budapest which aims to promote "open and transparent dialogue" with European suppliers through discussions focusing on the construction of Russian-designed nuclear plants in Russia and abroad.

More than 80% of all the products Rosatom has purchased this year have been supplied by European companies, Komarov said. In 2015, it has procured goods and services worth more than €12bn ($12.7bn). About one-third of the total is was its foreign projects. Rosatom plans to increase this to €14bn next year, 60% of which will be for its foreign projects. Its strategic aim is to attract European suppliers of nuclear power equipment and services to its foreign and domestic projects.

He added that Rosatom wants to provide its customers for the construction and operation of nuclear plants "with the most competitive, most effective, most efficient solutions". Its foreign order book now totals 34 reactor units, following the signing this month of an intergovernmental agreement with Egypt, he noted. Its portfolio for the next 10 years is worth more than $100bn, and this will "significantly increase" with the signing of new contracts before the end of this year, he said. If the entire nuclear supply chain and the whole NPP life cycle is included, Rosatom's portfolio is worth more than $300bn, he added.

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

As to Russia's contract to build two new units at Hungary's Paks nuclear plant, Hungary's government commissioner for Paks, Attila Aszódi, said: "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. That's why it is so important that Rosatom has organised this conference here."

Under a 2014 intergovernmental agreement Russian enterprises are to supply two VVER-1200 reactors for Paks, as well as a loan of €10bn and a €12bn finance package. "Rosatom has the opportunity to meet Hungarian suppliers and assess their potential so that it can lay down a network of partners," Aszódi said. "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%."

Commenting on recent European Commission (EC) scrutiny of the project, Aszódi said: "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."

Hungary had notified the Commission of its plans to sign the agreement with Russia in late 2013. European Atomic Energy Community (Euratom) approved a contract between Hungary and Russia on nuclear fuel supply for the Paks II project in April. Then in September, the EC confirmed that the project meets the objectives of the Euratom Treaty.

Then on 19 November the EC announced it had started legal action against Hungary over the contract, expressing concerns about its compatibility with EU public procurement rules. On 23 November, the EC opened an in-depth state aid investigation into Hungary's plans to provide financing for the new reactors. In particular it will assess whether a private investor would have financed the project on similar terms or whether Hungary's investment constitutes state aid.

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." He added that Hungary still expects to be able to start construction of the new units 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.

Hungarian prime minister Viktor Orbán accused the EC of "double standards". In an interview with Kossuth Rádió, he said: "One could ask what is actually going on, as in Europe recently no (new) NPPs have been put out to tender. A nuclear plant is being built in Finland, and there was no tender. We could once again say that we are a victim of double standards." He said later that the government's "firm position is that the Paks II project does not involve state aid, and a rational investor would also implement the investment, as its expected return is higher than the costs of the capital invested".

He noted: "At the same time, the government is committed to keeping the Paks nuclear power plant in state ownership, because Hungary's energy security - as well as cheap energy prices for households, and competitive ones for companies - can only be guaranteed in this way."

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