OREANDA-NEWS. October 5, 2007. Press-conference of the head of the Federal Agency for Nuclear Energy Sergey Kiriyenko for regional mass media

— Mr.Kiriyenko, a question from Smolensk region: where will the employees of Smolensk NPP work when the plant is decommissioned?

— Let me, first, introduce our general approach to our nuclear power plants. First: we are actively working to prolong the lives of our plants. The average period of prolonged service is 10–15 years, but in each specific case we make a specific individual decision. Our research institutes – such as Kurchatov Institute, Bochvar VNIINM — are keeping a constant eye on the plants to see how they work and for how much longer they can do it. As a matter of principle, all of our plants can work for 15 years more than they were supposed to initially.

In each case we try to prolong the live of a unit for 15 years. But Rostekhnazor generally gives permission for 5 years only – I think they are quite right. After the first 5 years, we monitor the unit once again and, if it is possible, carry out additional measures and prolong its life for 5 years more and then once again.

And now concerning your question: Smolensk NPP will have quite a long life and I don’t think that the local personnel will have any problems in the coming years. But now that we are planning to build NPPs in other regions, we are considering the possibility of inviting specialists from the existing plants. Today, we are actively introducing new technologies, so, we need more personnel. At our NPPs the personnel per KW rate is higher than at foreign ones.

One of the key problems is wages. There are a few ways to raise them. First of all, we are planning to increase Rosenergoatom’s incomes. As you may know, the Government has made a very important decision for our industry: starting from Jan 1 2012 we will have market prices for gas and electricity. It means that nuclear energy will be put in equal competitive conditions with other sources of energy and will be allowed to fairly compete with gas and coal. As a result, we will increase our incomes and raise our wages. There is one more way to raise wages: to optimize the personnel. Particularly, we are considering the possibility of inviting some of the professional employees of the existing plants to higher positions at newly built ones. I think it will be a good practice: professionals will give their experience to newcomers. As a result, we will have highly qualified personnel at our plants. 

In the next four years we are planning to, at least, redouble our wages. In 2010–2011 all of our employees will get twice as much as they get today. For this purpose, we are planning to reduce our unnecessary expenses – and we have ones.

For example, Elemash is one of our leading fuel producers. But its area is 100 times bigger than the area of a similar plant in Europe. Just imagine – 100 times! Not 2 or 3 or 5 – 100! But we still manage to compete! Our technologies are so good that, even with so big production areas and, consequently, high costs, we manage to outrun our rivals. This means that we have a big safety margin. But if we continue making such irrational expenses, we will lose this margin. So, we have much to do yet to increase incomes and to reduce unnecessary expenses.
 
The peculiarity of our industry is that its key asset is not mineral resources but human intellect. People are our foothold, guarantee of our competitiveness. That’s why we are so heavily investing in technologies – by investing in technologies we are investing in people.

I would like to say that this year we have launched a federal target program for the development of the nuclear industry of Russia in 2007–2015 and we are keeping closely to the schedule. This year we had to launch two new NPP projects and we did it. We have started the construction of Novovoronezh NPP-2 and Leningrad NPP-2.

In 2012 we are supposed to start commissioning two units a year. Now we have 12 constructions in Russia and abroad. By 2020 we are to build 26 new nuclear power units against just 31 units built throughout the Soviet period. 2020 is not the end of the program. We are not going to stop but will be increasing the pace.

So, nuclear power engineers will always have work and will always be in demand. We are not even considering special employment programs as we will be short of personnel. Our priority today is how to better train young specialists. As regards employment, we will have no problems with it.
 
— What are you going to do to provide young specialists with houses? Today, Leningrad NPP is feeling the need for a department that would deal with the problems of the youth. Do we actually need such departments?

Today, we can’t build houses and give them to new employees like we did in the Soviet times. Nobody will give us budgetary funds for that.

But we are acting in a different way: we are spending money for building temporary official housing for use during the period of construction. Once the project is over, the constructors leave the houses and we have a ready temporary office housing fund. Of course, this is not something we can call real private housing but this is a kind of reserve of company-owned apartments.

We are also starting a mortgage crediting program. We are going to actively develop this mechanism. The company will pay part of the interest, the employee will pay the rest. So, what we need for effective mortgage crediting is worthy wages.

It’s simple: if we pay our employees high wages and give them mortgage credits, they will be able to build own houses. Of course, at first, we will have to support the borrowers. For this purpose, we need a system of preferences: partial coverage of the pre-payment, partial payment of the interest (until the borrower begins to earn enough money for paying the interest himself). We should do it not only at Leningrad NPP but at all our plants.

As regards special youth departments, I don’t think we need them. If we follow this logic, we will have to set up separate departments for youths, for veterans, for women. I believe that active recruitment of young specialists is the key way of development for our NPPs. This is the job of the directors. Such problems should be solved at the top managerial level rather than by some special service somewhere in the personnel office.
  
— Some central newspapers say that we are leaving the foreign markets, that we are reducing out exports because we have enough orders at home. Is it true?

It’s nonsense. We are not leaving any foreign markets. On the contrary, we are actively enlarging our presence there. We are expanding in all directions. Let’s see what major directions we have. N1 is construction of nuclear power plants. Today, we are building seven nuclear power units abroad. We have already launched two units in China. No other country is building so much. Meanwhile, we are actively negotiating with lots of other countries wishing to have NPPs in their territories. We believe that abroad we could hope for as many contracts as at home. We believe that in the coming 20–30 years we can build almost as many NPPs abroad as we are planning to build at home. It is profitable for us to build NPPs abroad: our costs abroad are higher than at home because they have a different electricity price. So, this is a very interesting direction.

We are moving in other directions too. For example, in Jan-June 2007 our company Techsnabexport (Tenex) made contracts worth as much as $1.2bln.

One more Russian world leader TVEL is also increasing the number of its fuel export contracts. In 2006 we regained almost all markets we had lost before, including Loviisa NPP (Finland) and Temelin NPP (the Czech Republic). In July 2007 we made a contract for long-term supply of fuel to Temelin (starting from 2009), i.e. we have forced our rivals out of that market. This year TVEL has increased its incomes by 33% — due mostly to its exports.

The newly established Atomenergoprom holding will seek to enlarge its presence on the world nuclear market in all possible directions. We are going to expand in all directions without exception. The world nuclear market is a global rather than national market. That’s why we will compete for the global market rather than for any specific country.
  
— As you know, Elemash is part of TVEL Corporation. That’s why all of our employees want to know what place – if any — TVEL will have in Atomenergoprom holding?

Of course, it will have a place. The establishment of Atomenergoprom will not result in the extinction of fully-fledged well-known companies. The “TVEL” brand is known worldwide and we are not going to lose it. On the contrary, we are going to actively develop it. The same is for Tenex and some other well-known companies.

On the other hand, in the last decade some of the companies have built some kinds of subsistence economies – each of them covered the whole production chain. This is quite normal for a decentralized system: each manager tried to save his company and did almost everything on a self-sufficiency basis and I would like to thank them for that. Particularly, TVEL mined uranium, produced fuel elements and assemblies. Today, we no longer need subsistence economies. Each should mind his own business and be the best in his field.

That’s why Atomenergoprom has the following structure: it consists of divisions – subsidiaries representing the key markets. The first market is uranium mining and sale – something like the First Chief Department of Sredmash (Ministry of Medium Machine Building of USSR). In fact, we have restored this department on the basis of the well-known Atomredmetzoloto company. This division will control all uranium mining capacities: the existing assets of TVEL and Tenex, developing areas like Elkon with its 340,000 tons of uranium and mining capacities abroad. 

The second division is enrichment and conversion – similar to the Fourth Chief Department of Sredmash. Today, it is a separate complex of companies and Atomenergoprom will have a special system for managing this sector.

The third division is production of fuel. This is, certainly, TVEL. So, TVEL will go on. Today, it is highly competitive: it has advanced technologies and highly-qualified personnel. It keeps winning international tenders. Quite recently they made a contract with the United Kingdom proving once again that they make excellent fuel. As regards Elemash, in the last decade nobody has revoked his contract with the company. Their fuel is also excellent. The only thing TVEL has to do inside Atomenergoprom is to build a more efficient management system – for the above-mentioned hundred-fold difference in the production areas between Elemash and a German company of similar capacity is not good. We lose quite a lot and we must do something to improve this situation. So, TVEL and Elemash will, certainly, survive. Your personnel own part of your company’s stock. Stock market experts recommend buying your shares. So, I am sure that your capitals will get even bigger.  

— A question from Sarov: what place will the federal nuclear centers have in Atomenergoprom. Don’t you think that they need a special federal law? And my other question is about the bill on the establishment of Rosatom state corporation?

Let’s not confuse these two notions: non-market state corporation Rosatom and joint stock company Atomenergoprom.

Atomenergoprom is a truly market company. It comprises civil nuclear enterprises operating in the following spheres: mining, conversion and enrichment of uranium, production of fuel, production of equipment for nuclear power plants; engineering companies based on research and development institutes designing and building nuclear power plants; Rosenergoatom Concern with its 10 nuclear power plants. This is our civil nuclear industry. It works under market conditions: it competes both at home with other types of energy production and worldwide with big corporations like Toshiba-Westinghouse and Areva-Siemens.

Today, the world nuclear market is in the hands of 4–5 big transnational holdings. Our goal is to create a no weaker holding. In early Aug 2007 we established Atomenergoprom JSC. As of today, we have given it most of the state-owned shares it is supposed to hold. We are also planning to give it the shares of the “civil” FSUEs (federal state unitary enterprises) that will be reorganized into joint stock companies. Enrichment plants are also being corporized and will also join Atomenergoprom. This is not privatization. Atomenergoprom is 100% state-owned company and any transactions with its assets and subsidiaries should receive preliminary consent of the President.

So, Atomenergoprom represents the civil sector of our nuclear industry, with market conditions, competition and tough requirements.

But this is not the whole of the industry. We can’t place all of its sectors under business conditions. We have fundamental science, particularly, Institute of Physics and Power Engineering, Institute for Theoretical and Experimental Physics, TRINITI. We have nuclear weapons complex. It consists of not only federal nuclear centers but also of plants and infrastructure. The structure of the nuclear weapons complex is specified by a special presidential resolution. We also have nuclear and radiation safety agencies. They have nothing to do with nuclear weapons but they control everything concerning nuclear and radiation safety. This is a separate complex.

These enterprises have never been and will never be under any joint stock company. For them we are setting up a state corporation, more precisely, we are planning to reorganize the Federal Agency for Nuclear Energy (Rosatom) into a state corporation. The Government has already drafted a relevant law and has sent it to the Presidential Administration. So, it will shortly be sent to the State Duma. The bill says that Rosatom will be replaced by a state corporation comprising Atomenergoprom, nuclear weapons complex, fundamental science and nuclear and radiation safety companies.

We should not demand that our federal nuclear centers and nuclear weapons plants work under market conditions. They are competitive but their competitiveness is different. Today, we spend on laboratory tests just 1/10 of what the Americans spend but we are no worse and in some parameters even better than they. This is due to the intellect of the people working in our nuclear centers and nuclear weapons plants. We don’t want our nuclear weapons plants to earn money on the market. We want them to fulfill state orders. This does not mean, however, that they don’t have to spend their money rationally. Cost efficiency is the requirement we set to both the civil and military sectors.

As regards financing, I can say that in the last two years the Government has substantially increased its allocations for the nuclear weapons complex. We have got additional 60bln RUR and 38bln RUR under the target development program adopted last year. The President has instructed that starting from next year the key experts of the nuclear weapons complex – the core of our intellectual potential — be provided with monthly bonuses. Starting from 2009 our nuclear centers will get 2.3bln RUR a year. 

The budget cannot give more than planned. So, the President has decided to give the money from his own reserves. Each person will get from 5,000 to 20,000 RUR a month – an average of 12,000 RUR per capita. A total of 15,000 people will get the bonuses, including 5,800 people at VNIIEF in Sarov (All-Russian Research Institute of Experimental Physics) and 3,200 people at VNIITF in Snezhinsk (All-Russian Research Institute of Technical Physics). The size of the bonus will depend on qualification.

As regards the state corporation, the President has said: we must complete the formation of Atomenergoprom and Rosatom state corporation at one and the same time (in the first quarter of 2008).

— Mr.Kiriyenko, when are you planning to start the construction of NPP in Nizhniy Novgorod region?

— Under the general scheme, the 1st unit of Nizhniy Novgorod NPP is to be launched in 2016, the 2nd unit – in 2018. I think that the plant should have four units but for the time being we are planning just two ones. If we want to launch the 1st unit in 2016 we have to start the preparatory work in 2009 and the project in 2011.

— How are you going to solve the problems of the industry, for example, the problem of recovery of former uranium deposits, the problem of old tailing dumps, the problem of RTG (radioisotope thermoelectric generators)?

— First. We have adopted a federal target program for ensuring nuclear and radiation safety in 2008–2015. It is a big program – 145bln RUR (132bln RUR from the federal budget). So, by 2015 we are going to solve the above problems. We drafted the program last year but adopted it only this year: at first, it covered only Rosatom facilities but later we decided to include all hazardous radioactive sites of other departments: Transport Ministry, Education and Science Ministry, Roshydromet and many others. It is obvious that we need a single nuclear and radiation safety system. But since 90% of the problems concern Rosatom, we are the coordinator of the program.

Yesterday, during a meeting of the Rosatom Board we adopted a concept of spent nuclear fuel and radioactive waste treatment. Here, we need a long-term strategy – plan of action. And we have to adopt it within the next two months. There is one more problem mass media like to speculate on: the import of others’ spent nuclear fuel. Our position is clear: we don’t import and will never import others’ spent nuclear fuel into our country. It is my personal stance. Today, there is no fully acceptable system of SNF treatment. The Americans are making storage facilities for keeping SNF for 300 years until they develop effective treatment technologies. But in some 50–60 years the materials we regard as waste may prove to be valuable fuel as today we can use only part of their electric potential. For example, the spent nuclear fuel of thermal reactors is a good stuff for “fast” reactors. But since we don’t yet have 100% acceptable treatment technologies we don’t import others’ SNF. We just take back the fuel produced in Russia. This is a safety measure, particularly, a way to prevent terrorism. If we have produced some fuel, we are obliged to take it back after use. Spent nuclear fuel contains plutonium, which can be used for military purposes.

We have already talked about enrichment plants. In the selfsame Angarsk we substitute notions. What we call spent nuclear fuel is, in fact, tails. Tail is natural uranium without U-235 isotope. Natural uranium contains 0.7% of U-235 isotope, tail – just 0.3%, sometimes less, sometimes more. But in any case tail is less radioactive than natural uranium. In the 1990s we made contracts for further extraction of U-235 from tails. Under the contracts we import depleted uranium from Germany and France. Ecologists call it nuclear waste but it is not – it is just depleted uranium. We import it because we have much better technologies: the Europeans can’t extract U-235 from depleted uranium, but we can.

As a result of repeated extraction of U-235 we get “secondary tails” – even more depleted uranium. This matter is no longer dangerous in terms of radiation. It is dangerous chemically as it is a gas – uranium hexafluoride. That’s why presently we are developing technologies that could help us to extract fluorine from this gas. We have two such systems: one system is French, the other we have made ourselves. Since they are not enough, we have decided to make no more contracts for the import of tails and our foreign partners already know that. We can’t cancel the contracts we made 5–10 years ago but they all will terminate in 2008–2010.

— A question from Balakovo. We have all documents for starting the construction of the 5th and 6th units of Balakovo NPP. Our governor said that they are negotiating with RusAL for building a complex – power units and RusAL plants. What do you think about it?

— You know, we have not received such a proposal from RusAL yet. But this is quite possible. Our position is as follows: Atomenergoprom is 100% state-owned company, i.e. we can give no single share to a private owner. The law says that we can sell or lease the property of Atomenergorpom or its subsidiaries only if we have the preliminary consent of the President. Atomenergoprom is absolutely protected, i.e. we can sell nothing to private companies even after corporization. That’s why none of the existing nuclear power plants will be sold to private owners. They all will stay in the hands of the Government.

You want to know if private investors can put money in the construction of new nuclear power plants. The law does not say “no.” So, they can. We have two such projects. One project is in Vladivostok. We have already set up a special group. It will be an NPP linked to an aluminum plant. The other project is in Balakovo. Your 5th and 6th units are almost ready, but you don’t have necessary networks and your region does not need additional energy and will hardly do till 2015. That’s why the units are not in the general scheme yet. A newly built strong aluminum plant would certainly need additional electricity and, theoretically, this is quite possible.

— Mr. Kiriyenko, is it possible to use floating NPPs in Central Russia?

— Technically, it is quite possible, but will it be profitable? We just call it “a floating nuclear power plant,” it can work without floating as well. Simply, it is cheaper and easier to put such an NPP on a floating platform. One of the key advantages of such a plant is that it is ecologically perfect — it leaves no traces: you can put it on the platform, let it work for 30 years and take it away afterwards – with all of its waste onboard. That’s why we call it a floating or mobile nuclear power plant. You can put it wherever you want – if you are sure that it will give you profit.

The electricity produced by small and medium plants is more expensive as we spend as much on protecting small plants as we spend on big plants but get less electricity than from big NPPs. More specifically, the electricity produced by a 1000 MW plant is twice as expensive as the electricity produced by a 70 MW plant. So, you will hardly get any profit if you put a small plant in a place where you can put a big one. But as compared with the tariff of the plants working on imported coal, masout, diesel fuel – for example, in the Far North – the electricity of a floating NPP is 3–4 times cheaper. That’s why the Far North and the Far East are regarded as the most probable consumers of floating NPPs. Not because those areas have sea but because sometimes they are 500 and more km away from electricity networks and have no gas or coal of their own. There your floating plant will work at profit.

— Are you planning to export the plants?

— Yes, we are considering such possibility. Floating NPPs work on 12%-14% enriched uranium. Everything lower than 20% is low enriched uranium and is not subject to non-proliferation restrictions. That’s why we can freely use such plants everywhere in the world. But before exporting a product one should test it at home. That’s why we are building the first such plant in Seversk. We need a finished product so potential buyers could come and see it. 

We are also planning to produce a plant with a capacity of less than 10 MW. You don’t need to refuel it: you fuel it once and it works for 25–30 years. In Europe nuclear power plants help to reduce CO2 emissions by 600–700mln tons a year. But only developed countries can build big NPPs. Other countries need small and medium plants. If we want to enter the world market – and we want to enter it – we should use our competitive advantages. By 2011–2015 we should have a large assortment of nuclear power plants of different capacities.