The Economics of the Russian Nuclear Power Industry - Bellona

11completion rate, including the equipment available in the storehouse, is no lower than 35 percent; thecompletion cost is around RUR 75 billion, plus 10 percent on account of it being an even‐numbed unit).The costs of new construction at the sites of Novovoronezh NPP II and Leningrad NPP II are even higher.At that, construction time frames are only getting extended further, which is evidenced by the examplesof these units.” 22It is quite possible that nuclear construction is unjustifiably overpriced owing to ubiquitouscorruption, 23 a problem prevalent in all Russian industries as well as bodies of government. According toNigmatulin, corruption would account for no less than 40 percent of total costs. Clearly, corruptionresults not just in growing project costs, but also in an inferior quality of construction materials usedat the site and a less‐than‐desirable level of compliance with construction guidelines. Nuclearconstruction is a field where very strict requirements must be imposed with regard to the qualificationsand skills of the workforce engaged in the project, but in today’s Russia, the majority of labourersbuilding nuclear energy sites are unskilled migrant workers from Central Asia. From the economic pointof view, this could well lead to an increase in future maintenance costs for the plant and a shorterservice life on the whole. 24That actual construction costs exceed those projected at the outset is often called anextraordinary situation and assurances are heard that as construction experience accumulates and newnuclear construction sites become more uniform across the industry, costs will decrease accordingly.The reality, however, is yet to offer any evidence to support such claims.Estimated costs of building NPPs for export.The costs of nuclear construction projects implemented by Rosatom abroad are noticeablyhigher than in domestic projects – and thus may in fact be closer to the real expenses incurred. Forinstance, the price of the project Russia has negotiated to build in Turkey’s Akkuyu was last year cited atover $5 billion per one 1.15‐gigawatt power unit. 25In Belarus, Rosatom’s export construction wing, Atomstroiexport, has landed a contract to buildbetween 2011 and 2015 a nuclear power plant operating two VVER‐type reactors in power units with acombined capacity of 2,400 megawatts. 26 According to a document entitled “Belarus’s Strategy for22 Passing off ideas as facts, plans as results, and words as deeds, interview with Bulat Nigmatulin, November 22,2010, PRoAtom.Ru. (Zamysel vydayotsya za fakt, plan za rezultat, slovo za delo. 22.11.2010, ProAtom.Ru,www.proatom.ru/modules.php?name=News&file=article&sid=2660, in Russian).23 Yegor Mityukhin. Corruption in Rosatom: Grand larceny at Novovoronezh NPP II construction site, news article,December 23, 2009, PRoAtom.Ru. (Mityukhin Ye. Korruptsiya v Rosatome: Masshtabniye khishcheniya pristroitelstve Novovoronezhskoi AES‐2, 23.12.2009, PRoAtom.Ru,www.proatom.ru/modules.php?name=News&file=article&sid=2106, in Russian).24 The US is currently implementing a programme by which the operational lifetimes of nuclear power plants thathave been in operation for nearly 60 years will be extended by another 20 years. A sufficient level of reliability ofthe main structural components that are not subject to replacement must be shown as the necessary condition toobtain an extension on the existing operational license. Because the removable power production equipment isregularly upgraded in the course of operation, it is only the wear and tear – the fatigue – of the materials used tobuild the plant that does not allow an NPP to stay in operation forever. See, for instance: Nuclear power plants getto be 20 years older, news article. Aftenposten, November 11, 2010. (Atomkraftverk får bli 20 år eldre,Aftenposten, 22.11.2010, www.aftenposten.no/nyheter/uriks/article3914773.ece, in Norwegian).25 Energy Minister Shmatko: Russian Federation, Turkey agree on NPP construction terms, news article. RIANovosti, May 8, 2010. (RF i Turtsiya soglasovali vse usloviya stroitelstva AES, RIA Novosti, 08.05.2010,http://www.rian.ru/economy/20100508/232023678.html, in Russian).26 The highly unpopular project to be carried out by Russia in Belarus’s Ostrovets, Grodno Region, has faced bothvigorous opposition from Russian and Belarusian environmentalists and official objections from neighbouringcountries, such as Austria and Lithuania (the plant is to be built only some fifty kilometres away from theLithuanian capital, Vilnius). A preliminary deal on the project in Ostrovets (where initial construction works at thesite had already started) was reached between the Russian and Belarusian governments in early 2011, followed by