Ukrainian Energy Ministry: New talks with Russia on nuclear fuel plant in Ukraine initiated by China

Ukraine's Energy and Coal Ministry explains that a resumption of tripartite talks with Russia on the construction of a nuclear fuel plant in Ukraine was initiated by China, which is seen as a major investor that is expected to buy the Russian stake in the project.

"In June 2018, the top management of China Nuclear Energy Industry Corporation sent an invitation to hold trilateral talks on the Chinese side's engagement in the implementation of a project for the construction of a nuclear fuel fabrication plant in Ukraine," the ministry said on its website on July 10.

JV Nuclear Fuel Fabrication Plant was created in 2010 by Ukraine's State Concern "Nuclear Fuel" (50% plus one share) and Russia's TVEL company (50% minus one share) to produce nuclear fuel for VVER-1000 nuclear reactors. By the end of 2013, the shareholders had to inject $84 million into the JV's charter capital to bring it to about $104 million. The funds were needed to build the fuel plant in Ukraine's Kirovohrad region. The total cost of the plant was estimated at UAH 1.679 billion ($210 million at the then forex rate). The plant's first phase was to be put into operation in 2015, but the construction did not start.

According to Ukraine's Energy Ministry, State Concern "Nuclear Fuel" invested UAH 80 million (about $10 million), including $5.2 million in advance payment for the production of equipment by Russia's TVEL company, which is part of the Russian state-owned nuclear corporation Rosatom.

The Ukrainian side has been seeking to sell the stake owned by Russia's TVEL to a potential investor to recover part of the funds allocated for the production of the equipment.

Read alsoUkraine sells its stake in nuclear fuel JV with Russia and Kazakhstan

"To raise investment in the construction of the nuclear fuel plant in Ukraine, negotiations on the nuclear fuel production facility in Ukraine were held in 2015-2016 with potential investors, namely with China Nuclear Fuel Corporation (CNFC), which showed interest in the creation of joint production of nuclear fuel for the Ukrainian nuclear power plants' needs," the Ukrainian ministry explained.

"The Chinese side is expected to buy out the entire stake belonging to TVEL and fully fund the project," it said.

The ministry also shared a letter dated May 22, 2018, sent by Chairman of the Board of China Nuclear Energy Industry Corporation (CNEIC) to Director General of State Concern "Nuclear Fuel" Serhiy Drobot. The letter says that the Chinese investment in the construction of the plant was postponed in connection with a merger of CNEIC and CNFC.

Therefore, CNEIC proposes holding the trilateral talks, including with TVEL, as soon as possible and confirms the Russian side's consent.

"We also consulted with TVEL and acquired mutual consent to continuing the tripartite negotiation with the State Concern as soon as possible. Therefore I sincerely propose a tripartite meeting at your earliest convenience," Liu Chunsheng, the Chairman of the Board, China Nuclear Energy Industry Corporation, said in the letter.

The ministry says that at the talks with the Russian and Chinese sides, it plans to discuss conditions of CNEIC's participation in the project, the acquisition of the stake from TVEL, as well as to determine priorities in the cooperation.

The ministry also shared a letter sent by Ukrainian Energy Minister Ihor Nasalyk to First Deputy Director General of Russia's Rosatom Kirill Komarov. In his letter, the minister confirms readiness to discuss the status of the plant's construction and proposes a meeting in Brussels on July 9-12.

The wording of the letter is different from the one circulated by the Ukrainian economic news outlet Ekonomichna Pravda on July 10, which alleges that Nasalyk offered to hold a meeting with Rosatom in Brussels on July 9-12 because Ukraine is allegedly interested in cooperation with Russia in building the nuclear fuel plant.