Eastern Europe

Finding a new direction

12 September 2005

While the juggernaut that was Russia's nuclear industry is moving down a new road with new drivers, there is growinf concern in some quarters at what is viewed as a lack of real direction and firm leadership. Bu Judith Perera

The Russian government reforms of March 2004 saw the dismantling of the powerful Atomic Energy Ministry (Minatom), which had controlled the industry for decades. The Federal Atomic Energy Agency (FAEA) that replaced it was an emasculated version of the ministry with reduced powers and personnel. The aim of the reforms was to streamline and centralise administration, increase efficiency and prepare the ground for putting the nuclear industry on a more commercial footing. Many eminent nuclear scientists believe there is still a long way to go.

Vladimir Asmolov, the coordinating director of RRC (Russian Research Centre) Kurchatov Institute, said the management reforms “have nothing to do with improvement of efficiency, strictly otherwise.”

Another leading scientist told NEI that the FAEA faces problems because it is staffed by “newcomers” who have relatively little experience of managing the nuclear industry. He added that, previously, policy was largely decided by the scientists who made recommendations to the government, and these were normally accepted. “Now everything is upside down. The government hands down policy decisions to the agency, often based on considerations which have nothing to do with the nuclear industry itself.”

To be fair, it seems the government soon realised that the broad sweep of its initial reforms were in many instances impractical and there followed a series of legislative amendments intended to redress the situation. In May and June 2004, for instance, new legislation granted the FAEA the right to submit bills to the government for consideration, a power which had been removed by the March reforms. The agency was also given the right to independently issue regulations over activities within its competence. However, the new amendments also specified cuts in agency staff, reducing the number of deputies from eight to four, and changing the structure of the organisation from 14 departments and eight directorates to 16 directorates. Asmolov pointed out that this has given the deputies an almost impossible task. For instance, Ivan Mikhailovich Kamenskikh, a former Minatom deputy minister in charge of the nuclear weapons complex, now has to additionally cope with nuclear power and the nuclear fuel cycle. “It’s impossible in principle for anyone to manage all these from one office.” He asked how the agency “can make an integrated assessment when its two departments – for nuclear power and nuclear construction – operate only with 60 staff who are supporting everything there?”

The situation was made difficult during the ensuing months of internal restructuring needed to implement these changes, as staff lobbied to influence the direction of the reforms and to retain their positions.

Performance in decline

In 2004 the output of Russia’s nuclear power plants was down 3.8% compared with 2003 to 143TWh, failing to meet the output target figure of 146-147TWh. Output was also down 5.6% on the year in January 2005. The nuclear share of overall Russian electricity production in 2004 also decreased slightly to 15.4% compared with the adjusted 2003 share of 16.7%. The average capacity factor of Russia’s nuclear units was 73.2% in 2004 compared to 76.3% in 2003. On the plus side, power limitations were lifted at Kursk 2 after upgrades, Kola 2 extended its service life, Leningrad 1 completed upgrades and extended its life, and Kalinin 3 was commissioned. One former Minatom official attributed the 2004 underproduction to unscheduled and extended outages due to “poor planning, attempts to pass wishes off as deeds, eternal problems with funding which disrupt equipment supplies, and institutional problems made worse by external constraints.”

New plant commissioning has been pruned to just three units by 2010 on the back of plans to phase out VVER-1000s in favour of larger VVER-1500 units. Exports of nuclear equipment, fuel and services totalled $3.16 billion in 2004, slightly up on 2003, but below target. Nuclear exports play a key role in development, providing badly needed funds and bright future prospects. Russia has its sights firmly set on developing its export markets in Asia and Eastern Europe, hoping to pick up further contracts for nuclear units and related services in India, China, Iran and Bulgaria. But even here the news has not been good. After losing the tender for Finland’s fifth unit to France, rapid development of the new VVER-1500 is seen as vital to future export success. Asmolov does not think Russia lost the tender in terms of the detail design, “although the generating capacity offered by the French – 1600 MWe – played its important part.” He says there were many other political and organisational reasons, noting that “Atomstroyexport was incapable of competently representing Russia there.” Russian plants being built in India, China and Iran have all experienced delays. Partly as a result of this, most commentators now believe the next tenders in China and possibly also in Bulgaria will go to France. However, Russia is now hoping to develop some kind of cooperative arrangement with France in the area of nuclear exports.

Financial pressures

If there are different opinions about the wisdom of the political reforms in the nuclear industry, there is widespread agreement on the need to attract investment in the face of limited government funding and inadequate income from electricity tariffs. To this end, nuclear utility Rosenergoatom (REA), currently a federal state unitary enterprise, is to be floated as a closed joint stock company. Nuclear companies dealing with fuel and exports such as Tvel, Tenex and Atomstroyexport took this route some time ago with a degree of success. The change in REA’s status has been in the pipeline for several years and the mechanics of it are now being worked out by the Ministry of Finance, the Ministry for Economy and Development as well as property control and management authorities. It will also require changes to a number of laws. FAEA head Alexander Rumyantsev noted a joint stock company has more transparent economics and business management system, adding: “Certainly, we are not so naïve to expect investments into the new entity from external investors but it’s significant for us to succeed in attracting loans on future saleable products.” The aim is to attract development funds while funds for operation are raised through electricity sales.

In April, in preparation for the changes, Stanislav Antipov was appointed head of REA replacing Oleg Saraev whose three-year contract expired in February. Antipov was formerly head of the Kalinin plant and is credited with pushing through the successful commissioning of unit 3 in the face of serious difficulties. Antipov is thought to be up to dealing with the challenges facing REA including its flotation and liberalisation of the electricity market.

FAEA is also strengthening its relations with major bank Vneshtorgbank, established in 1990 as a private corporation with government-run ownership to handle foreign trade transactions for Russian companies and institutions. In 1998, the bank became a public corporation. Vneshtorgbank also conducts business for REA, Tenex, Atomstroyexport and various individual nuclear plants and facilities.

Duma hearings

Concerns about fragmentation, inexperienced leadership and underinvestment in the nuclear industry reached a peak earlier this year, culminating in March in hearings at the state Duma (parliament) on legislative support for innovative nuclear power development initiated by the Duma’s committee for energy, transport and communications. Much of the credit for organising the meeting falls to professor Valentin Ivanov, a former deputy minister of atomic energy and director of the Research Institute of Atomic Reactors in Dimitrovgrad, and now a Duma deputy for Ulyanovsk region.

As a result of the meeting, the Duma drafted recommendations which will be submitted to the president, the government, the FAEA and other agencies asking the government to draw up and submit a package of bills to change existing legislation to support the development of innovative nuclear power systems. More specific recommendations included drawing up a national nuclear power development programme based on fast neutron reactors and a closed fuel cycle, which would involve stage-by-stage commissioning of such reactors, with priority funding from the state budget. The government is also recommended to develop a concept for further structural changes in the nuclear industry including a bill lifting legislative constraints on modifying the form of ownership of certain facilities (in particular, nuclear power plants).

The hearings were attended by 230 leading figures including the heads of major institutes and organisations in Russia’s nuclear industry. The Kurchatov Institute’s president, Yevgeni Velikhov, led the discussions.

While the focus of the hearings was fast reactors, there was also considerable discussion of nuclear’s place in the wider energy context, given finite fossil fuel resources and limited uranium reserves. Academician Velikhov noted that Russia’s gas supplies would be almost exhausted by 2030 and oil would also be running low. It made more economic sense to use these to produce petrochemicals or for export than to burn them to produce electricity. Both academician Dmitri Lvov and Kurchatov Institute vice president academician Nikolai Ponomarev-Stepnoi looked at the long-term prospects for the use of hydrogen as a fuel and the use of nuclear reactors, especially high temperature reactors, for hydrogen production. Academician Mitenkov pointed out that in the short term Russia could make better use of small and medium size nuclear plants, especially those based on ship reactors. He noted that the infrastructure to produce these in quantity already existed, although it was underused and deteriorating.

The hearings showed broad support for pushing ahead with new nuclear technologies and called for state support to be made available for a national development programme in this regard, including necessary legislative changes and funding. Duma members made it clear that they would support such legislation and asked the nuclear community to help with drafting new laws. In particular there was recognition of the pressing need to expedite work on fast reactors, a technology in which Russia currently leads the world, but which is stagnating due to lack of funds. academician Fedor Mitenkov warned: “The longer we delay fast neutron power development hiding behind the excuse of lack of money – which I have been hearing for many years already – the further we fall behind, as it has happened to us in other industries.” He noted that a broad range of problems associated with the BN reactors had already been solved but construction was either decelerating or progressing so slowly that a facility could become obsolete just as building work was completed. Mitenkov and other speakers urged the rapid completion of the BN-800 being built at Beloyarsk.

International standing

The BN-800 is now being viewed as a demonstration plant for a new type of closed fuel cycle and also possibly for associated hydrogen production and minor actinide burning. Last year the FAEA was looking to introduce the closed fuel cycle only in 2040 but now it is supporting current development of the concept linked to the BN-800. There is also federal support for the project with the pro-government United Russia Party supporting it in the Duma and the federal budget for next year includes $200 million for construction of the BN-800. The original plan was to use weapons grade plutonium in the reactor but this is meeting resistance from the USA.

The nuclear industry’s relations with the USA are becoming increasingly strained over a number of issues. These include Russia’s continued support for Iran’s nuclear development, a perceived US failure to deliver on promises of assistance to Russia, and US insistence on more access to Russian nuclear facilities, liability issues and, most recently, the arrest in Switzerland of former atomic energy minister Yevgeny Adamov on charges of corruption bought by Washington.

While some Russian scientists would like to see the BN-800 become a joint project with the USA, for others this as a vain hope. Academician Nikolai Ponomarev-Stepnoi told the Duma hearings: “They don’t want us in hi-tech, even where we are nearly caught up”. Similar views were expressed by the Duma’s energy, transport and communications committee chair Valeri Yazev. “Today the US is not interested in financing Russian nuclear programmes,” he said. “We were promised two reactors instead of those that produce plutonium in Tomsk and Krasnoyarsk, to finance a MOX-fuel fabrication facility.” The USA has found the cash to install physical protection systems but all other programmes have been decelerated. He believes the reluctance to finance Russian fast reactors is because the USA is “extremely behind” in this area. Therefore, fast reactor development in Russia “should be considered a domestic challenge.”

Nikolai Oshkanov, Beloyarsk nuclear power plant director, noted: “We must make fast neutron reactors ourselves, the same way we made the atom bomb ourselves. The state must set the goal and use what is necessary to achieve it. As we see, it’s not much. The hearings demonstrated that the funds the state would save in the area of natural gas supplies are comparable with costs of fast neutron nuclear power development.

Liability issues were resolved in May when Russia ratified the Vienna convention on nuclear damage which it had signed in 1996. Ratification hearings are also under way in the Duma on the Joint Convention on the Safe Management of Spent Nuclear Fuel and the Safe Management of Radioactive Waste, which Russia signed in 1999. While these moves are designed to enhance Russia’s international standing, they are unlikely to satisfy the USA which, above all, wants to see an end to Russian-Iranian nuclear cooperation. Many Russian scientists believe this is the real basis of the moves against Adamov, who played a key role in developing these links when he was minister.

In any event, Russia’s nuclear industry is clearly under some pressure both domestically and internationally. However, when the dust finally settles on the restructuring now under way, the worst fears of those who are lamenting the loss of Minatom’s strong direction may yet prove to be exaggerated. There are signs that the concerns of the scientists are now being heeded. For, provided the Duma makes good on its promises, it seems that Russia’s parliament will implement legislation that will enable the industry to strengthen its integration and push ahead.

One of the highlights of 2004 was the commissioning of Kalinin 3 One of the highlights of 2004 was the commissioning of Kalinin 3

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