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Thursday, March 15, 2018

The reform brought the Russian nuclear industry to a new level

Rosatom is possible to recognize not just one of the most successful, but a model Corporation. The ten years when the industry was headed by Sergey Kirienko, opened up a global perspective. However, the successor, Kiriyenko threatened to rest on laurels: competition in the global nuclear market is becoming more severe, and the political risks have risen sharply.

You must understand that Sergey Kirienko’s leaving the state Corporation “Rosatom” and goes to work in presidential administration at the time of the highest rise of the domestic nuclear industry for the entire post-Soviet period. For the “decade Kiriyenko,” the Russian nuclear industry not only managed to significantly increase its share in the energy mix of the country but also confirmed its global consistency – last year portfolio of Rosatom foreign orders exceeded 110 billion dollars.

The most effective Corporation

“Rosatom” can be considered almost exemplary embodiment of the main objectives pursued by the creation of state corporations”

Rosatom was the last in a series of state-owned corporations, which appeared in Russia during 2007. And always stood apart from its “sisters” that public opinion and the media are regularly accused of inefficiency and lack of transparency of spending (and even corruption). Essentially, Rosatom can be considered almost exemplary embodiment of the main objectives pursued by the creation of state corporations. The idea was to concentrate a maximum of funds and managerial competence in the most important for the country’s development at the same time brought together under a single “umbrella” disparate assets. In the nuclear industry, this rate is definitely played.

Dynamics of production and financial indicators of Rosatom over the past three years suggests that the industry is now on top of never-seen-before wave. From 2013 to 2015 revenue grew up to 821,2 with 529,2 billion rubles, the amount of taxes paid to different levels of budget – 99 to of 164.5 billion rubles, and the amount of electricity – up to 195,2 of 172.2 billion kWh. If in 2007 the share of nuclear power in total generation in the Unified power system of Russia amounted to 15,9%, while to date it has grown to 18.6%. Thus, according to a recent annual report of Rosatom, the level of public support for nuclear energy in Russia increased to 75.5%.

“According to various estimates, Rosatom is truly one of the most effective corporations, not only in the country but on the world market, largely thanks to the team that preserved and developed Sergey Kirienko, – the Chairman of the Board of the Center for strategic research “North-West” Vladimir Knyaginin. – Rosatom is one of the first established its own development strategy, which was then converted into the Federal target program, first moved to the software development investment that looks the benchmark for many state-owned enterprises. Rosatom is a very large R & d portfolio, which recorded a promising direction. In part of the transition to digital production Rosatom is a leader not only in the segment of construction of energy facilities, but also on the Russian construction market as a whole. Plus the financial stability of major assets, retention of professional backbone of the team in this regard Rosatom is also very good.”

Evaluating the personal contribution of Putin in the achievement of Rosatom, Vladimir Knyaginin focuses on his ability as a organizer and strategist. What Kiriyenko has built the structure of the Corporation, then stood at the head of the formation of its strategy, establish the work of keeping the strategic priorities in follow-up, and finally formed a team of world-class professionals. Experience Kiriyenko was in demand and outside of the nuclear industry: now in these footsteps coming Roscosmos is the only state Corporation that was created in Russia after Rosatom.

Another major challenge that Sergey Kirienko has successfully accomplished was the transformation of Rosatom into a full-fledged global player, and that Rosatom is also different from other state corporations, which are oriented mainly to the Russian market. Today Rosatom is ranked first in the world in the number of NPP units (36 units) in the foreign portfolio, and the portfolio of orders for the ten-year period from 2013 to 2015 increased from 72.7 to 110,3 billion. Foreign revenues the Corporation for the same period increased from 4.97 to 6.26 billion.

According to Vladimir Knyaginin, that Kirienko was able to successfully build external negotiating processes, and it was a very difficult task: “the Bulk of it generated by international contracts is not our traditional customers. Of course, now continues to work with countries such as Hungary and Finland, initiated during the Soviet period, but with mostly Asian customers relationships had to be built from scratch, and in significant competition with the aggressive players in the global nuclear market, the French, Koreans, Chinese. Therefore, the results achieved are expensive”.

The success of Rosatom in the world market largely due to the fact that the Russian nuclear scientists had significantly greater range of possibilities than their competitors. In an interview, first Deputy General Director – Director for development and international business of Rosatom Kirill Komarov explained that Rosatom is the world’s only nuclear Corporation, which operates in all segments of the value chain – from mining to construction, operation and output of the nuclear power plant, combining the functions of both the operator and technology provider. “All this gives us a unique set of skills and the ability to offer solutions “turnkey” that is particularly in demand when it comes to newcomers,” – said Komarov.

Active entry into a foreign market allowed Rosato to start the recovery of domestic nuclear engineering. For example, after joining the engineering division of Rosatom famous factory “Atommash” in Volgodonsk in the Rostov region for the first time in a quarter of a century received orders for its main profile is production of equipment for nuclear power plants.

Significant advances in Rosatom Kiriyenko demonstrated in the diversification of its activities, said the center. Proof of this is, for example, the strong growth showed the production Association “START” (Penza region) or the “Aileron” company, including in such areas as engineering and security. In addition, a considerable amount of cooperation with those sectors, which require a holistic technological solutions, especially with the defense-industrial complex. Some movement occurred in the technological sphere in the form of new materials, digital models, production software. Finally, thanks Kiriyenko within the framework of its human resources programs resumed active work with universities. For example, MEPI as a result of such interactions could substantially adjust your strategy, ensuring the development of new competencies in engineering and on the adjacent markets, which already find use in the Corporation.

Global challenges for the state in the state

“If 50 years ago the nuclear industry was a generator of new knowledge, now it lives at the expense of absorption of solutions from other industries”

Rosato in the coming years may have to solve more complicated tasks than during the first period of existence of the Corporation, is inseparable from the name Kiriyenko.

According to a source close to the nuclear industry, the challenges facing Rosatom, Grand. First and foremost is the changing structure of the global energy market: nuclear segment will shrink under the onslaught of renewable energy, and that means that competition will only increase. At any moment there may be political risks, given the high role of reputational costs in the industry. In fact, these risks Rosato already have to deal with. Suffice it to recall the permanent representations of Lithuania, demanding to stop the construction of the Ostrovets NPP in Belarus, and the recent conflict with Turkey, immediately put into question the prospects of NPP construction “Akkuyu.”

“The contractual basis of Rosatom in foreign markets – about 100 billion, and obviously, for successors Kiriyenko will be very important this portfolio to hold in the conditions of difficult circumstances, says the center. Plus of such contracts is that the nuclear industry get long-term load – work on external contracts can last 10-12 years. But there are significant risks – high competition between different segments of the electricity industry, strong reliance on large-scale project financing.”

In the domestic market, continues center, they will continue to work to increase efficiency and productivity, the challenge of reducing costs over the next several years is a key. Also a lot of work on the development of “nuclear” areas of advanced development (Tor) – Sergei Kiriyenko managed to break through the very decision to create them, to achieve a large number of benefits for their residents, but this success is still required to consolidate.

Another strategic challenge is the technology associated with the speed and cost of construction. According to a source close to the Corporation, Atomenergoproekt (NIAEP), the key project division of the Russian nuclear industry, have a strong team for design, at the very advanced level in the world in terms of understanding how things should be done. In addition, due to Kiriyenko, Rosatom has invested in the latest systems design – for example, there are multi-d platform for the design of nuclear power plants on the principle of 6D design.

“But one of NIAEP will be difficult to transform the entire Corporation, – the interlocutor speaks. If 50 years ago the nuclear industry was a generator of new knowledge, now it lives at the expense of absorption of solutions from other industries – and within Rosatom is not all want to accept, because it would change the model of the atomic business. Strategic challenge – will Rosatom platform company in the sense that the platform is not the actual station, but at least the power system. In 2012, Rosatom made this proposal, when formulated version of the development strategy – then the Corporation was going to develop and store nuclear waste, and engineering, but until something is not enough. And then there are the social “baggage”, from which the Corporation can’t refuse their company towns, of which more than 20 pieces. How to solve the problem of company towns, not examining the problem of the reorganization of the technological chain of the company?”

However, all this is typical of large corporations, which are unwieldy by its very nature – the same problems faced, for example, the French Areva, another global leader of the market. “Demand from Rosatom to become fully market the company is impossible in principle – the same Chinese in developing their nuclear industry was our dear, – says the source of the newspaper VIEW. – Of course, Rosatom can and should be criticized in the debate about state-owned companies and state capitalism in General, but in comparison with other state-owned corporations, it is much more efficient. He leads real projects and is recognized in the world, and he has something to offer to the market in the long term – for example, Rosatom developed the environmentally sound nuclear power plants, there are technologies for transport and mining of atomic raw materials and so forth.”


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