Russia pins energy hopes on new nuclear monopoly

MOSCOW. (RIA Novosti commentator Tatyana Sinitsyna) - President Vladimir Putin recently signed the so-called "tunnel law," which is opening new vistas for Russia's civilian nuclear power industry.

Its official title is as follows: "The Law on the Peculiarities of Managing the Property and Shares of Organizations Using Nuclear Energy and on Relevant Changes in Some Legislative Acts." The document had previously been approved by the Duma.

The law is designed to rationalize the legal and institutional conditions for the operation of the energy-and-industry sector, and make it more competitive internationally and more attractive for investment. It separates the Russian nuclear power sector into military and civilian parts.

Leaving intact the military branch, the law aims to establish a state-controlled nuclear holding monopoly, Atomenergoprom, or Atomprom, using the industry's civilian assets. It will be a vertically integrated structure encompassing the nuclear industry's full technological cycle.

Sergei Kiriyenko, head of Rosatom, the Federal Nuclear Energy Agency, said, "The holding should integrate all stages of nuclear energy generation: uranium extraction and enrichment, fuel production, and generation, as well as all related industries, including nuclear and non-nuclear machine-building, science, engineering, and construction."

This is a revolutionary event - the state has established control over the entire civilian branch of the nuclear industry. It has revived the old but highly effective Soviet style of management: government control.

The holding, which brings together all nuclear power plants, must remain federally owned, which rules out privatization. The state has purchased a controlling interest in those plants that have already been reincorporated as joint-stock companies.

Atomprom will give a new lease on life to the Russian nuclear power industry. Earlier, Sergei Kiriyenko suggested a plan to build 40 power supply units in the next 25 years. This could increase the share of the nuclear power industry in the federal power supply system to 25% (it is now 16%). The project's price tag is $60-$70 billion, and it will require a huge investment. Investors prefer to deal with state-guaranteed projects, and in this sense Atomprom is very attractive.

The new monopoly is the offspring of a large-scale plan for the development of the nuclear power industry which Rosatom started carrying out in 2006. Russia's best nuclear specialists drafted this ambitious program under Kiriyenko's guidance, and with unqualified political and material support from the government and President Putin.

It is not easy for the conservative nuclear industry to make a huge leap forward. Apart from structural reforms, this goal requires a new mentality. Born in the 1950s, during the Cold War, as a guarantee of state security, the nuclear industry was first seen as an elite and closed structure. In the last 15 years, the Kremlin has not had a clear understanding on how to reform this sensitive structure, and it lived by inertia, struggling for economic survival.

It had a large budget, and itself contributed a significant amount of revenue to the treasury, but it was constrained by collisions between its two branches. The new law has removed all stumbling blocks in the way of uranium-enrichment projects, which can now be implemented in cooperation with other countries. It also permits ownership of fissionable materials imported into Russia by foreign legal entities. The law allows Russian legal entities to possess non-weapon nuclear materials, plants, and storage depots, but a list of owners will be determined by presidential decree.

Having opted for nuclear energy at the turn of the century, Russia has embarked on a fundamental restructuring of its nuclear power industry. In 2003, the government announced its intention to develop the industry in order to contribute to energy stability and protect against predicted energy crises.

In his annual address to the Federal Assembly in 2006, Vladimir Putin emphasized the need to guarantee national energy security and increase the nuclear industry's share of energy generation from 16% to 25% by 2025. The government adopted a federal strategy for developing the industry, which laid out goals and ways of achieving them.

"If nothing is done, by 2025 Russia will not have a nuclear power industry for technical reasons; the service life of the old nuclear power plants will soon expire, and they will be shut down, whereas new ones will not appear," Kiriyenko summed up. Experts have calculated that the only way out is to build at least two nuclear power units a year. This is one of Atomprom's tasks.

One of its priorities is to be more competitive in the world market. Today, Russia's nuclear power industry receives 90% of its profits from exports. Atomprom has every opportunity to make handsome profits from the construction of nuclear power plants abroad, nuclear waste processing and disposal, and uranium enrichment.

An ambitious project to make a nuclear leap has been launched. Now it remains to decide who should carry it out, and where to find the intellectual and technical resources for its implementation.

The opinions expressed in this article are those of the author and may not necessarily represent the opinion of the editorial board.

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