Kirill Komarov, Deputy CEO, head of Corporate Development and International Business Unit, told us about the company’s achievements and plans concerning international market.  


- What we were the results achieved in the international arena last year?  

- 2013 was a very successful year for Rosatom. The main year’s feature was successful growth of our foreign stock of orders, almost up to $73 bln, although at the beginning of the year 2013 we had only about $ 66 bln and about $5 bln was the contracts turnover and corresponding stock-order reduction. The growth from 61 up to 73 is a good result indeed, if to remember that today markets don’t show much development and we can see that in this we are far ahead. It certainly is a guarantee that in the coming 10 years enterprises of the field will have stable source for investment and development.

- It’s not just a one year’s result, is it?

- We can speak about serious growth during the recent 3 years in particular. Thus,   we entered the year 2011 with the figure of about $39 bln; during 2011-2013 our income became $13 bln. Hadn’t we worked so hard, only $ 24 bln would have been left, while the actual number is three times bigger.

Thus, during these years we formed a new stock of orders for Rosatom enterprises for the sum of about $50 bln. Besides, last year was rich with events concerning projects, which are important for us. Thus we delivered the Bushehr NPP, which now is working in its design mode, to the client. At the end of the year the first power unit was launched in India, which is also an important milestone for us, since the station itself had been ready for quite a while, but because of Indian political events its launch had always been postponed. While last year it was finally started.

Very successful indeed was our project with Belarus – construction of its first NPP. A concrete was poured at unit 1, preparation works at unit 2 were going full pace. We won the tender in Jordan, where Rosatom was a chosen leader, having competed with French and Canadians.

We can’t help mentioning various agreements concerning the Hanhikivi NPP. Besides we also signed a cooperation memorandum with British Department of Energy and Climate Change, which might open us the way to the UK market. There were other big events as well. That’s why on the whole we can say that international development of the State Corporation is going well; it fulfilled its earlier tasks and provided good prospects for the future.

- What are your future key-tasks then?  

- We continue working on our stock of orders to make it grow bigger. Our task for this year, no matter how complicated are the conditions Russia and the world’s nuclear industry are currently in, is to increase the number of orders from $73 to $98 bln. This goal is very ambitious and challenging, however, to my mind, quite realistic, since it’s not just a year’s work, but the result of the recent years’ efforts.
 
- What will form this tremendous figure?  

- First, at the beginning of the year we signed an intergovernmental agreement with Hungary on construction of two new units of the Paks NPP, all related contracts are to be made by the end of the year. We also hope that the contracts will be signed according to our new scheme of so called integrated offers: when we offer our client not only to design and build the plant, but make a contract for fuel delivery for several decades, for maintenance and operating service. While with Hungarians the contract will also concern spent NF handling.

Today the contract with Vietnam, concerning construction of two power units  is at quite an advanced stage  - an intergovernmental agreement has already been signed, a state loan agreement made. The same in Bangladesh. Our further partnership with Iran in construction of new nuclear power units is also among our plans.

We are also looking forward to additional contracts at the SB NFS and service market along with several other projects and enterprises of Rosatom.
 All this together makes us sure that our chance to increase our stock of orders for such a significant sum of money is not at all that slim.

In addition to the above, I don’t think those excellent results are Rosatom’s limit: during next 3-5 years we’ll be offering the market a serious competitive product and will win.  During the recent years we haven’t lost a single tender we took part in, which means, it’s not just us appreciating ourselves, but the whole market as well.
 
A stock of orders, since it is meant for a long period of time, is always a little ahead of revenue in its growth. Thus, revenue is always a bit late, because atomic projects are long-term; signing an agreement suggests that the work on it will start in about a 2-3 years’ time. Now we are approaching the milestone when this gap period is coming to its end; 2014 is the last year for us when we move upon the level of $ 5 bln a year, formed in previous years. As early as in 2015 we’ll provide income from our international orders amounting to more than $ 8,5 bln. Which means, the year 2014 is the last opportunity for us to check once again if all processes inside Rosatom are functioning well enough to provide such a challenging result. What is crucial about this is that we are not going to buy any new enterprises and extend dramatically the number of our employees. The same people, the same plants and factories, that provide $ 5 bln annual foreign income of Rosatom, will have to provide it in the amount of more than $8.5 bln in 2015 by contracts signed today.   That’s why an important task for us is to keep improving our inner processes.   

- How will Rosatom’s integrated offer develop and why is it unique?  

- Our advantage is that today we are the only company in the world able to offer a full line of nuclear technological chain production, from uranium extraction to plants’ decommissioning. There is no analog to Rosatom, since even our most serious rival, French Areva, is able to do many things, but can’t boast operating experience, which we can do due to our Rosenergoatom concern and which is a point of crucial importance for countries-newcomers, breaking ground in nuclear power. Just building a plant is not enough, one also has to provide its stable work with good economic performance. For this one should deliver not only an object itself, but its operating technologies, help preparing personnel, working all regulations, forming good supervising control. At the same time a whole bunch of other issues are to be solved: what to do with SNF and RAW, how to contract fuel. A client has to know where the fuel is going to come from during next 60 years, which is the minimal life-term of NPP. We today are ready to offer solutions which will completely satisfy all our clients’ needs, including the problem of funding. Here, of course, we use strong support of our government, which helps us both in intergovernmental financing and also in more complicated tasks, such as BOO projects, where we build a station, at the same time being its owner and operator. The first work organized with this pattern was with Turkey; last year a project, based on the same scheme, started in Finland. Now we are to become co-owners of Finnish Fennovoima, having obtained 34% of its shares and fully developing the project as investors. The reason of this is that the company chooses Russian corporation, Russian fuel, signs several contracts with us for the whole life-cycle of the plant. Thus our opportunity to give an integrated offer strengthens our positions.    

I cannot but mention the recent main tendency: a new product now is in demand at the market. Any client company, no matter how it sees your partnership – whether it prefers contracting you or invite you as a partner – in the end will ask you the same question: what will be the kw/h price of the energy produced by your plant? For developing economy, like Turkey, for instance, it is very important to know the price of electricity. Why in this light our Finnish project is so important now? Because it has been the first time we worked over the logic of the kw/h cost. Who our Finnish partners are, after all? They are not professional power engineers and, moreover, not atomists. Not even power companies. They are industrial enterprises, municipalities, electric energy users – those who connect their development and investment plans with how well they will be able to provide fair and stable-priced energy in order to fulfil those plans. Nowadays they often say that nuclear energy is expensive, but it depends on how you count. Yes, it is indeed expensive to build a NPP; however the process of producing energy is much more reasonable if you compare with gas or coal generation. And, what is more important, much more predictable. During the recent years we have been studying raw-material markets volatility and how the price for natural uranium and gas has been changing and we know that the price difference is quite big for both things. This results in the final cost of electric energy; since for NPP the fuel part is only 10% of operational self-cost, while for gas or coal station fuel part is 60-70%! So, even if the cost of uranium increases by two, this will only give 5% of growth in comparison with the previous cost. Meanwhile, if gas prices double, it will give 70% cost growth. That’s why today’s demanded offer at the market is connected with kW/h self-cost, which is the most important point for a consumer.

Thus, since we are able to offer quite a competitive price for electric energy, produced by plants built upon our design, we open new wide horizons for our future work. It’s not just a competition between atomic vendors, but between different types of generation. After all, a consumer doesn’t really care what plant is there – nuclear, gas or coal. What he or she cares about is the cost of kw/h produced.
 
- What are the changes in international business approach and how will the global presence of Rosatom expand?  

- Our main approach is that we are still trying to maximize selling of work, production and services of Rosatom. Communicating to every particular client we have to be able not only to react to its one-time request, but demonstrate the whole line of our production, trying to raise interest, to make client buy as much as possible.
 
In order to strengthen our presence at particular markets, a year ago we decided to create our new Rusatom - International Network company, which will be in charge of our global presence at all world’s markets. Regional offices of the company, created in all key regions, will have to know how to offer our clients maximum products, works and services.   Rusatom - International Network will have to keep a strong connection with all State Corporation’s divisions, not substituting them in what concerns international sales (each division will continue being responsible of  selling its own product), but somewhat helping them sell, coordinate,  avoid unnecessary internal competition, structure work. To cut it short, the task is to help getting a consolidated industrial effect.

- What are your goals this year for developing new businesses?  

- The main goal here is to expand the scale of the State Corporation business as it is. We understand that the production we make and the markets we are currently present at, have limits. We are not alone there, we have rivals; besides the size of markets is different too.  We can grow, but this growth is not limitless. Moreover, some products we are selling now might be not that interesting to the market in 5-10 years. That’s why we have to think, what exactly we are going to offer to the market after some time. We have to put specific goals, work on plans of new products which today are not in our stock. The dynamics is quite interesting: if compare 2013 and 2014, the percent of new Rosatom’s production in total income in 2013 was 7%. This year we’ll make it grow almost up to 14%.

- What are these new products?

- For us new products mean either entering new markets, or when we sell product related to technological solutions we already have at the market we are already present at. The development of nuclear medicine is promising – not only from the point of view of equipment supply, but in idea of selling medical services, based on our equipment and technologies. We are interested in all concerning the use of radiation technologies in its widest sense. For instance, ray treatment of agricultural products, helping them to preserve their consumer qualities for a longer time. We are also interested in everything concerning NPP life cycle; since last year we were seriously working on issues connected with maintenance service of the plants of our design abroad. The results of work of our Rusatom - service company as a centralized integrator, promoter of our service technologies, are impressive: during the very first year of their work abroad they formed an almost $200 mln stock of orders, while this year’s task is to increase it twice. We see good prospect here, since the more NPPs we build abroad, the more service works we have. Rosenergoatom Concern has some interesting projects, connected with wholesale and retail of energy produced. Today the Concern’s “daughter” got a status of a so-called guaranteeing supplier in three constituent entities; the status is given to the one who provides specific supplies of electric energy to particular consumers in the area. There are several more directions.  We formed a list of Rosatom enterprises’ products and service and are currently working on its promotion.  

- How will Ukrainian events influence the country’s relations with Rosatom?


- Rosatom’s position is quite simple and open. We always fulfill our contract obligations, no matter what the situation is. International climate hasn’t been very stable for several decades already, but we just fulfill our obligations. We know that all nuclear projects are long-term. Any NPP is a practically 100 years’ project: it is constructed for 10 years; 60 years is its normal operation period which can be prolonged for at least 20 years more, provided it was used properly, and then at least 10-20 years more for decommissioning.  So we see that those are long-term relations, for a 100 years’ period; they have to be preserved no matter what is going on in the world. This is the matter of responsibility and nuclear safety, at some point. That’s why our firm position is the following: always fulfil responsibilities. So there are no Acts of God today between us and Ukraine, we continue NF supplying to NPPs, which are 15 power units built upon Soviet technologies; we continue removing SNF from Ukrainian territory and we are going to keep up. We hope that the position of our clients will always be reasonable, economically cautious, not apt to political fluctuations, but taking into consideration only real interests of Ukrainian nuclear power. A simple example: the HEU-LEU program which we finished with the US last year, having fulfilled all our obligations, was going on for 20 years. Now let us remember those 20 years in the light of Russia – US relationship…The periods were very different: Primakov’s plane turnback; argument concerning Syria, Libia, Iran etc. However all those 20 years we were fulfilling our obligations on the program and our American partners did the same. That’s why we are sure that everything going on in nuclear power sphere, thanks to its long-termness, shouldn’t be apt to political changes.

For Reference:

Rosatom’s foreign stock of orders in 2013 amounted to $ 73 bln  

No matter how hard the conditions of today’s nuclear industry and Russia are, our goal is to increase our stock of orders from $73 to $98 bln in 2014.  

Over the recent years Rosatom hasn’t failed a single tender.