HomeMediaLatest NewsA nuclear plant will connect Russia and Turkey for 100 years

A nuclear plant will connect Russia and Turkey for 100 years

12 March 2021

Kondratiev Sergey V. Deputy Head of the Economic Department, Head of the Real Sector Group

Sergey Kondratiev, Deputy Head of the Economic Department at the Institute for Energy and Finance, gave a comment to the internet portal Vzglyad.ru on constructing the Akkuyu NPP in Turkey.

On this project, Rosatom is testing a new build-own-operate (BOO) model, that has never been used in nuclear power before. As a rule, the company builds a nuclear power plant as a general contractor and, after commissioning, transfers it to the owner. And the Turkish case is unique - here Rosatom is initially not only a builder, but also an investor and owner of this nuclear power plant. And after putting it into operation, it will sell electricity to the Turks in order to recoup the $ 22 billion at which the project is estimated.

However, experts are concerned that the main risks of the project are borne not by the Turkish, but by the Russian side. “For Rosatom, despite its experience and competence in the nuclear field, this project is not so simple,” Kondratiev said.

The first risk, he said, is related to the regulation of electricity prices. “Investors in nuclear energy in Western Europe usually ask the government to guarantee the purchase of electricity at a certain price, which would provide a return on investment on the capital invested. In the case of Akkuyu, this was not originally the case,” Kondratiev says.

The second risk is associated with raising funds. Initially, Rosatom hoped to find local and international investors in this project, but so far it has not been able to do so. Therefore, all funding - and we are talking about $ 22 billion - falls on the shoulders of Rosatom alone, the expert notes.

On the eve of the start of constructing the third NPP unit, it became known that Rosatom had attracted additional funds for construction in Sovcombank in the form of two loans totaling $ 300 million for a period of seven years.

“Of course, Rosatom has the opportunity to attract state loans from Russian banks, but financing is mainly in US dollars. Hence, the third currency risk follows. The Turkish lira has seriously depreciated in recent years. This can also complicate the return on investment,” Kondratiev adds.

The fourth risk: it cannot be ruled out that at some point Turkey will decide to follow in the footsteps of a number of Western European countries and may take a political decision to decommission all nuclear power plants. In this case, the owners of the stations do not receive any compensation. This cannot be ruled out, because this is a long-term project, for almost a hundred years.
Kondratiev Sergey V. Deputy Head of the Economic Department, Head of the Real Sector Group
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