— Nuclear power sector will become more attractive for investors

On Dec 6 the State Duma adopted the first reading of the bill “On the Peculiarities of the Management of the Property and Shares of Organizations Using Nuclear Power and On Relevant Changes in Legislative Acts of the Russian Federation” – a bill generally termed as “tunnel law” or law “On the Nuclear Power Sector Reforms.” Chairman of State Duma Committee on Industry, Construction and High Technologies Martin Shakkum presents his vision of the key ways of the reforms.

— Mr. Shakkum, could you tell what the bill “On the Nuclear Power Sector Reforms” is about?

One of the key goals of the bill is to form a stable nuclear power industry structure – a structure capable of effectively operating under market economy. The way of such restructuring should be to unite separate links of the technological chain of the civil sector of the nuclear power industry into a single production complex.

— Why should we adopt the bill exactly now?

The Rosatom reforms are essential for the resolution of the new problems and tasks arising in the sector. On Oct 6 the Russian Government approved a federal target program “Development of the Nuclear Power Complex of Russia in 2007–2010 and till 2015.” This program suggests constructing 10 big NPPs in Russia, i.e. almost redoubling nuclear power generation capacities. Russia is also building 7 nuclear reactors abroad and they also need fuel. In this context, Russia is running increasing short of uranium. The current uranium production can hardly cover the half of the nuclear power industry demand. Presently, the shortage is covered by the Soviet-time reserves, but this shortage will keep growing and the reserves may prove insufficient. Hence, Rosatom’s key task today is to prospect and develop new uranium fields.

The restructuring of the nuclear power sector will be based on market interdependence of the participants in the nuclear industry “pool.” This is the key prerequisite for its development and strengthening of its positions in Russia and in the world in the face of increasingly harsh rivalry by foreign transnational corporations.

— What barriers will be the bill remove?

Today, the native nuclear power generating companies operate as both unitary enterprises (enrichment, generation, applied science) and state-owned JSCs (uranium extraction, fuel production, construction). The ownership regime difference between unitary enterprises and JSCs makes it hard for the Government to carry out a single state development strategy and investment and technical policies. Moreover, unitary enterprises cannot serve as a basis for an effective holding structure similar to the biggest foreign rivals like American-Japanese Westinghouse-Toshiba and French-German Areva-Siemens.

That’s exactly why the journalists have termed the bill a “tunnel law” – it is a bee-line towards overcoming investment barriers in the nuclear power sector.

— Is it true that the adoption of the bill will lead to the nuclear sector privatization?

This opinion comes from misunderstanding of the difference between unitary enterprise, whose property is owned by the state and JSC, who owns its property itself even if all of its shares belong to the state. Already today many big enterprises are private from juridical point of view: TVEL, Concern TVEL, ELEMASH (Elektrostal), producing fuel assemblies for NPPs.

The reform of the sector will transform the unitary enterprises to be listed by the President into JSCs. However, 100% of the shares of the main holding company will belong to the state. And one will be able to change this only if one changes the law.

— If the enterprises are corporized, how will the state control the distribution of nuclear materials?

The fissile materials and the facilities of military and dual purpose to be listed by the President will be owned exclusively by the state. The newly established JSC and its daughter companies will be responsible for the physical protection of the facilities, for security and state secrecy. The protection of such facilities, irrespective of who owns them but with due respect for their scale, will be carried out by interior troops or extra-departmental guards. So, the state will gain even stronger control over those facilities.

— Can the bill attract investments in the nuclear power sector.

Of course, it can. The key principle is that JSC is always more attractive than unitary enterprise. The only investor of unitary enterprise is the state; the private business can credit it but such crediting is far from favorable. JSC is the owner of its own property and distributes its profit on its own. That’s why the daughter companies of the new holding – where the private sector can also have a share, according to the law – may well receive private investments. The head company will also grow more attractive as it will secure the credits with its own property.