Sanctions against Rosatom: implications for Russia and the West

Rosatom builds nuclear power plants around the world, supplies them with fuel, receives and disposes of radioactive waste in Russia. This means that sanctions against Rosatom should hit not only the fiefdom of Alexei Likhachev , depriving it of export earnings and technologies, but also Western countries that use the services of Rosatom. Building and operating a nuclear power plant is not like heating a boiler with coal, the process is much more complicated. But the European authorities may decide to take such a step - Finland has already refused to cooperate with Rosatom on the construction of the Hanhikivi-1 nuclear power plant.

There are sanctions - no nuclear power plants

The sanctions will mainly affect the ability to pay for the construction and operation of nuclear power plants, as well as the complicity of the authorities of those countries that have agreed to host Russian power plants. A lot of money is circulating in this area: only the engineering division of Rosatom, the company Atomenergomash, has a portfolio of orders now estimated at 850 billion rubles .

Let's assume that the sanctions will not affect the future of the Belarusian NPP - its work is now limited only by technical problems associated with a protracted repair. China is also unlikely to refuse to complete the Xudapu and Tianwan nuclear power plant projects. So far, the situation at the El-Dabaa nuclear power plant under construction in Egypt, for which the Russian government has allocated a $25 billion loan, is quite stable. Cooperation with the Korea Hydro-Nuclear Energy Corporation (KHNP) is to some extent protected from sanctions. South Korea, commissioned by Rosatom, will build "turbine islands" - 80 buildings at 4 power units for 2.25 billion. But there are other projects that are more sensitive to sanctions.

In India, Rosatom is currently carrying out work on the construction of power units 3, 4, 5 and 6 of the Kudankulam NPP. Only for the construction of 3 and 4 power units Russia provided a loan of $4.2 billion ($3.4 billion for the supply of equipment and 800 million for the production of nuclear fuel). So in the event of a break in relations, not only the state corporation will suffer, but also the state budget. India is unlikely to refuse to complete work on power units 3 and 4 - equipment supplies are already underway. But with power units 5 and 6, work on which began a couple of years ago, options are possible. For example, India recently refused Russia to create an alternative system of bank payments due to fears of secondary sanctions.

In Bangladesh, Rosatom last year began work on the construction of two power units of the Rooppur NPP, 90% of which will be financed by a Russian loan of 11.38 billion. On the one hand, the current authorities are loyal to Russia. But the authorities of Bangladesh, following the government of Sri Lanka, faced an energy crisis. This summer, fuel prices have been tripled, schools are closed 1 day a week to save energy, working hours are being cut, people are protesting. Under such conditions, a coup d'état can occur, as in Sri Lanka. And it is not known what moods the new rulers will have.

And the main pain is the Hungarian nuclear power plant Paks-2. On August 26, the Hungarian government issued a permit to Rosatom for the construction of power units for a period of 10 years. But do not forget that Hungary is part of the EU, and its authorities are now the main irritant for Brussels. The government of Viktor Orban is the only one in Europe that openly opposes the abandonment of Russian hydrocarbons and goes against the common position. And everything would be fine, but Hungary cannot boast of financial independence. In February, the European Union threatened the recalcitrant country with 40 billion euros in subsidies. Against this background, even a $10 billion concessional loan from Russia for the construction of a nuclear power plant fades.

As for the Finnish Hanhikivi-1, Rosatom is largely to blame for this. The money was received (for a total cost of 5 billion euros, the FNB allocated 2.4 billion euros, and Sovcombank gave a loan of 500 million euros), but things did not go any further. Contrary to the requirements of Finnish law, the beneficiaries of the general contractor JSC "Concern Titan-2" were not disclosed, the necessary documentation was not provided. After the contract was awarded in 2013, it was planned to obtain a work permit by 2017. The deadlines were constantly postponed, but the documentation was not prepared by 2022 either. In addition to the political situation, the Finns are also tired of waiting.

Not by Rosatom alone

The main service provided by Rosatom to operating foreign nuclear power plants is the supply of fuel. Ukraine was the first to refuse the products of the TVEL company (the fuel division of Rosatom) - back in 2008, Viktor Yushchenko signed a supply agreement with the American Westinghouse. It is American fuel that is currently used at the Zaporozhye NPP. American fuel is more expensive - in the first quarter of 2019, Ukraine paid $51.23 million for it instead of $17.5 million for Russian assemblies. But experience has shown that replacement is quite possible.

On the day the special operation began, the Swedish Vatenfall refused to purchase Russian fuel for the Ringhals nuclear power plant. It is easier to replace it there than at Soviet reactors, since Sweden uses the foreign design TVS-Kvadrat. In the summer, the Czech nuclear power plant Temelin refused Russian fuel. From now on, fuel assemblies for the Soviet VVER-1000 reactors will be supplied by Westinghouse and the French Framatome.

Foreign companies have not yet mastered the production of fuel assemblies for the Soviet VVER-440 reactor of the 1971 model. But there are few operating nuclear power plants with similar reactors in Europe. These are Dukovany NPP in the Czech Republic, Rovno NPP in Ukraine, Loviisa NPP in Finland, Paks NPP in Hungary and Mochovce NPP in Slovakia. At the same time, Dukovany are provided with fuel for 3 years in advance. Such purchases are not made at the last moment.

Loss of customers - loss of big money

Experience shows that Soviet reactors can also operate on American fuel. Refusal of Russian products is only a matter of time, there are alternatives. For TVELL and Rosatom, this threatens to lose billions of dollars. TVELL's export revenue last year amounted to 800 million euros , which is approximately 58.9 billion rubles at the weighted average rate for 2021. And the portfolio of export orders for the entire life cycle is estimated at 64.6 billion (almost 4 trillion rubles at the current exchange rate). Rosatom's losses are Russia's losses. Not a single export project is financed by the state corporation on its own; the funds of the National Welfare Fund appear everywhere. At the beginning of the year, Mikhail Mishustin approved the allocation of 56 billion rubles from the National Welfare Fund to finance Rosatom's foreign projects. Not many of them are in complete sanctions safety. After the rejection of oil and gas, the West may begin to reject the Russian atom.

In the end, everyone will suffer because of the sanctions. Only now the West will sooner or later switch to its own fuel and technology, and thereby support its own economy. And Rosatom will lose a significant part of its export portfolio, and will only be left with third world countries that are ready to develop nuclear energy solely at the expense of soft loans from Russia. That is, Russia will be left without an influx of money.