Russia and Prospects for Egypt's First NPP

24.02.2015

Russia’s state-owned nuclear energy giant Rosatom is the world leader in NPP exports. It has a portfolio of contracts to build 25 nuclear power reactors, and is involved in all three Middle Eastern NPP projects currently under way.

Predictably, one of the central topics during President Vladimir Putin’s visit to Egypt on February 9-10, 2015, was cooperation on peaceful use of nuclear energy between Moscow and Cairo.

Russia’s state-owned nuclear energy giant Rosatom is the world leader in NPP exports. It has a portfolio of contracts to build 25 nuclear power reactors, and is involved in all three Middle Eastern NPP projects currently under way. In Iran and Turkey, it supplies or will supply the reactor technology and nuclear fuel; in the UAE, it will provide significant portion of the enriched uranium for the future nuclear power plant.

Egypt, meanwhile, is not a complete novice as far as nuclear projects are concerned. It was the first Middle Eastern state to show interest in nuclear energy after U.S. President Dwight Eisenhower announced the Atoms for Peace program in 1953. Under President Nasser, the Soviet Union built a nuclear research center in Inshas, Al Sharqia Governorate, with the ETRR-1 light-water 2 MW research reactor at its core. In 1964 Egypt became the first Middle Eastern state to have formulated technical requirements for its future nuclear power plant. Egypt’s peaceful nuclear energy plans, however, have often become hostage to armed conflicts in the region and serious nuclear accidents in other parts of the world. First came the Six Day War in June 1967; another blow was the Chernobyl accident in 1986, which ushered in an era of stagnation in the global nuclear energy industry. The accident at the Fukushima NPP in Japan in 2011 and the political turbulence in Egypt itself brought on by the Arab Spring reignited the public debate on whether Egypt should pursue nuclear energy.

Nevertheless, the Egyptian political leadership continues to regard nuclear power plants as an important and indispensible source of energy that will underpin sustainable growth of the country’s economy. Egypt has arguably the most sophisticated nuclear legislation and regulatory basis in the Middle East. By the region’s standards, it also has large numbers of skilled nuclear specialists, and is therefore seen as one of the best-prepared Middle Eastern candidates to build nuclear power plants.

In March 2008 Russia and Egypt signed a bilateral agreement on peaceful nuclear energy cooperation. During President Putin’s recent visit to Cairo, Rusatom Overseas (a Rosatom division) and Egyptian Nuclear Power Plants Authority (NPAA) signed a NPP Project Development Agreement (PDA). The document outlines the key parameters of potential bilateral nuclear energy cooperation. It is expected that if Rosatom is chosen as the general contractor for the project to build Egypt’s first NPP, that cooperation will include the following key areas:

• A joint project to build an NPP in Egypt, consisting of two 1,200 MW reactors, with a possibility of adding another two reactors at some point in the future;
• Building an NPP-based water desalination plant;
• Credit financing to be provided to Egypt by the Russian government;
• Russian assistance in training Egyptian nuclear specialists, putting in place a modern nuclear regulatory framework, etc.

As of February 15, 2015, Egypt has yet to make an official announcement of the tender for the contract to build its first NPP. Neither has Cairo announced the choice of Rosatom as the general contractor for that project bypassing the normal tender procedure (as Turkey has done, for example). The Egyptian government will now have to decide whether to follow the previously announced procedure that involves an international tender (which will mean a delay of another two or three years), or bypass the tender procedure and sign a direct contract with one of the world’s leading nuclear exporters. If the choice is made in favor of the Russian supplier, Moscow and Cairo will have to sign additional bilateral agreements on building the NPP and on the provision of credit financing for the project. Authorized organizations will then have to sign the actual executive contract to build the NPP.

The NPP project will cost an estimated 10-20 billion dollars, depending on the number of reactors to be built. It could become the central element of Russian-Egyptian bilateral trade, which was worth about 3bn dollars in 2014.

Success of the Egyptian NPP project will depend on three key factors: stabilization of the political and security situation in Egypt; a viable financing mechanism that reflects the country’s economic situation; and the government’s ability to secure support for the project among the local residents of El Dabaa, the site chosen for Egypt’s first NPP back in the 1980s. Moving the NPP project to another site would mean a delay of four or five years. Meanwhile, instability in Egypt and the wider region could push the project back even further. Even under the optimistic scenario, the first reactor of the future El Dabaa NPP is unlikely to be launched before 2025. 

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.

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