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Doubts that Russia can actually deliver on all its much touted nuclear sales deals

Russian-BearFalse nuclear hope, HIMAL South Asian  BY M V RAMANA AND ZIA MIAN14 AUGUST 2016
“……Can Russia deliver?

The Russian deal for Rooppur has its specific set of challenges. There are at least two reasons to question Russia’s ability to deliver on its commitments. First, Russia has made so many nuclear deals in recent years that it may not be able to deliver on all of them. The Russian State Atomic Energy Corporation (Rosatom) claims to have orders for 30 nuclear power plant units in 12 different countries at a total value of over USD 300 billion.

The Russian Parliament’s independent Audit Chamber has documented delays and cost increases in reactors that Rosatom is building within Russia. It is likely that Russian reactor projects abroad will also experience delays and cost escalations. A second reason Russia may not be able to deliver on Rooppur is the collapse of its currency, the ruble. In the case of the reactor for Belarus, the Russians made a fixed price deal that was denominated in dollars. Because the ruble has fallen relative to the dollar, costs to Rosatom have reportedly gone up by 71 percent and Belarus has been asked to provide additional financial support to keep the project going.

Since the Rooppur contract, like most nuclear contracts, is not publicly available, one cannot be sure about the specifics of the deal. However, according to media reports, the contract with Bangladesh is not a “fixed price” but a “cost plus” one where “the vendor has the right to come up with any cost escalation (plus their profit margin) to be incorporated into the contract amount”. Russia seems to have prepared for the possibility that the Rooppur project will cost more than expected and to protect its profits.

Bottom line: the Rooppur reactors may be good for status-seeking project for Bangladeshi politicians; for the bureaucrats and technocrats of the Bangladesh Atomic Energy Commission; and for the Russian nuclear complex and the middlemen who will likely profit from the many subcontracts that would be signed. But it does not look like a good bargain for the people of Bangladesh.

~ M V Ramana is with the Nuclear Futures Laboratory and the Program on Science and Global Security at Princeton University, and the author of The Power of Promise: Examining Nuclear Energy in Indiahttp://himalmag.com/false-nuclear-hope-bangladesh-russia/

August 14, 2016 - Posted by | ASIA, business and costs, politics, Russia

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