Russia is likely to continue monopolizing the supply of fuel to the nation’s nuclear power plants, after the Ukrainian government – in typical non-transparent fashion – picked a Russian state company to build Ukraine’s first producer of nuclear fuel.
Not only was U.S. Westinghouse unfairly passed over during the selection process, critics say, but the Russian state looks set to control the fuel producer after it’s built.
Just months after Russian Prime Minister Vladimir Putin called for a merger of the two countries’ nuclear industries, the Kremlin policy of global energy diplomacy is becoming one of energy hegemony in its own backyard.
“We are already dependent on Russia for gas and oil; now we will be dependent on them for nuclear energy, too.”– Serhiy Pashinsky, an opposition lawmaker.
“We are already dependent on Russia for gas and oil; now we will be dependent on them for nuclear energy, too,” Serhiy Pashinsky, an opposition lawmaker and member of the parliament’s fuel and energy committee, said.
The Ukrainian Energy Ministry, which announced on Sept. 7 that Russian state-owned TVEL had won a competitive evaluation to build the nuclear fuel plant, denied that politics had been involved in the process.
“The only politics involved here was that we are finally going to get the plant built,” said Petro Chernov, director of the department for atomic energy and the nuclear industry at the ministry.
Although Ukraine has its own uranium, used to make the fuel, and zirconium, used to make the fuel assemblies, it lacks the technology to build its own maker of nuclear fuel.
TVEL, the fuel arm of Russian nuclear energy giant Rosatom, has traditionally filled the gap, exporting nuclear fuel across the border to run Ukraine’s 15 reactors at four separate power stations.
But after Ukraine declared independence in 1991, Westinghouse began challenging this relationship, and a tender was held in 1996 to decide who would build Ukraine’s own fuel maker. TVEL won the tender, but the plant was never built. So a decade later, under the watch of pro-Western President Viktor Yushchenko, Westinghouse and TVEL were invited to take part in a competitive evaluation to decide who would build the fuel plant.
“A competitive evaluation was said to be simpler and faster than a proper tender,” said Svitlana Merkulova, Westinghouse’s spokesperson in Ukraine. But the selection process dragged on until this year, when Russia-born Mykola Azarov took charge of the government as prime minister.
The composition of the inter-agency committee that selected Russian TVEL as the winner of the evaluation has yet to be revealed, according to Merkulova.
Moreover, during the drawn-out selection process, articles periodically appeared in the Ukrainian media characterizing the U.S. company’s fuel design as unsafe for Ukrainian reactors.
Merkulova told the Kyiv Post that Ukrainian authorities had freely admitted that the 1996 decision in favor of TVEL was politically motivated. And Volodymyr Saprykin, an energy specialist at Kyiv-based think tank Razumkov Center, said that at least one version of the evaluation criteria that he had seen was tailored to TVEL.
“Nobody was excluded from making an offer,” the Energy Ministry’s Chernov said. The government held extensive talks with both Westinghouse and TVEL for two years, he said. “These were the only two companies to express an interest in the project,” he added.
Westinghouse’s Merkulova points out, however, that her company not only made a competitive offer to the Ukrainian government but attempted to get the country low-cost financing for the project from international lenders.
“The Ukrainians knew that these banking institutions would positively consider a request for a loan for such a project. However, our discussions with the ministry have never progressed to the stage that the ministry would be prepared to apply to these banks for funding.”
The head of Rosatom, Sergey Kirienko, also gave assurances that TVEL was selected fair and square: “We are confident that the proposal we made to our Ukrainian partners on the basis of technology and economics was without a doubt the best,” he said on Sept. 6.
Kirienko said Russian technicians are already ready to start work on the new plant, which is scheduled to be launched in 2013. An agreement should be signed in a month, TVEL’s press service announced.
“I don’t want to describe some kind of nightmare situation here, but suffice it to say that we will be using Russian technology and Russian technicians and we will be dependent on both.”
– Serhiy Pashinsky, an opposition lawmaker.
Under former Prime Minister Yulia Tymoshenko, the Ukrainian government drafted an energy strategy that called for diversification of the country’s sources of nuclear fuel.
The cabinet of ministers now must endorse the inter-agency committee’s decision, then a Ukrainian-Russian joint venture will be formed. But clarity as to which side will own the controlling stake in the new plant isn’t expected any time soon.
“It’s currently the subject of negotiations. A final decision is expected by the end of the year,” Chernov said.
In the mean time, Russian advances to take over Ukraine’s gas pipelines and storage facilities continue afoot.
Gazprom chief Alexei Miller reiterated calls this week for “a merger” between his company and its Ukrainian counterpart Naftogaz.
Putin voiced similar designs for Ukraine’s state-owned nuclear company Energoatom, which the government continues forcing to sell its electricity at below-market rates.
According to Pashinsky, a lawmaker in opposition leader Tymoshenko’s faction, the Russians are already too close for comfort.
“I don’t want to describe some kind of nightmare situation here, but suffice it to say that we will be using Russian technology and Russian technicians and we will be dependent on both,” he warned.
Kyiv Post staff writer John Marone can be reached at [email protected].
