Cernavodă and the congratulations

• Units 3 and 4 of Cernavodă will cost 6.5 billion Euros

• The state may participate with funding through other production companies as well

• State guarantees are recommended, together with very long term contracts for the sale of energy

• The internal rate of return of the project - almost 11%

The estimated value of the project to build Units 3 and 4 of Cernavodă is 6.5 billion Euros. At the level of the year 2008, a gross estimate (according to the authorities) indicated a total value of the investment of about 4 billion Euros.

According to data from the feasibility updated feasibility study posted on the website of Nuclearelectrica, this amount comes from the value of the assets owned by Nuclearelectrica (a maximum of one billion Euros), the value of the preliminary improved offer made by the consortium led by Lavalin (4.78 billion Euros), the value of the costs of the beneficiary (417 million Euros) and the value of the unexpected expenses (239 million Euros). The annual exploitation and operating costs amount to 235.4 million Euros for 10.7 TWh of electricity delivered into the system.

Covering the costs of the project will be done through an equity contribution of the shareholders, loans from the export agencies from the countries of origin, shareholder loans, as well as the contribution in kind of Nuclearelectrica SA with the existing assets.

The financial-economic analysis shows that the project is profitable and competitive on the long-term electricity market. The internal rate of return is 10.66%, and the average cost for the entire period of exploitation (50 years) is 54.28 Euros/MWh. The minimum price which the delivered electricity will be sold at, averaged over the entire lifetime duration (89.64 Euros/MWh, including a 15% rate of return on equity) is lower than the forecasted market price (92 Euros/MWh). In the first period of exploitation, due to the servicing of the debt, investors will be required to accept a lower return on equity than the one expected (10% compared to 15%) for the minimum price for the sale of the electricity to fit within the price forecast.

Even though the project is still feasible, Nuclearelectrica holds 85% of the project company for the Reactors 3 and 4 (Energonuclear). Thus, the issue of finding funding for the financing of project arises. Hence why it was necessary for Energonuclear to attract as many foreign investors as possible.

Furthermore, in order to make the project more attractive, consultants recommend steps such as government support by granting financial guarantees and the conclusion of long term contracts for the sale of energy, in a transparent manner and with mutually beneficial terms and conditions.

Other measures are the confirmation of the availability of the state guarantees for loans, especially for export loans by mid-2013, the contribution in kind of a quantity of heavy water to the share capital of Energonuclear, the clarification of the legal status of the right of ownership of the heavy water, the identification and appointment of companies in which the state is a majority shareholder which would get involved in the project, as well as guaranteeing the involvement of Transelectrica in the works to reinforce the electric power lines which contribute to the evacuation of the power from the four nuclear units.

Also, Nuclearelectrica needs to sell as big a quantity as possible on the free market. The company currently delivers about 70% of its production on the regulated market, and this percentage must fall to 20%, in favor of the open market, where the price is a lot bigger.

Another measure proposed by the consultants is the construction of just one reactor, if the state deems it opportune, and certain regulatory measures such as firm long-term contracts which guarantee a specific price, regardless of the evolution of the market.

The feasibility study will be reviewed by the shareholders of Nuclearelectrica in the General Shareholder Meeting of October 26th, and it also needs to be approved through a Government Decision.

REPORT

• The nuclear plants in the EU have serious safety issues

This month, the European Commission warned that all of the nuclear plants in the Union have serious safety issues, with the worst being found in France, Great Britain and Spain. The report said that none of the 58 nuclear plants in France meets the safety standards set by the International Atomic Energy Agency (IAEA), as they are particularly lacking when it comes to the safety measures against earthquakes or floods. The British and Spanish plants do not have hydrogen equipment to avoid explosions. Nuclear plants Oliluoto and Oskarsham, from Finland and Sweden, respectively, only have an autonomy of one hour in the event of a power outage. France has already decided to shut down the Fessenheim nuclear plant, the oldest in the country.

Following the control, 11 weak points were identified, including dangers resulting from floods and earthquakes. The report, made by the experts of the commission, did not recommend the closing down of any of the plants, just the measures which should be taken. In order to eliminate the uncovered issues, 10 to 25 billion Euros are needed.

Opponents of nuclear energy said that the test was limited and that it did not include the risks of fire, explosions, plane crash, sabotage, human error. The level of protection in the event of a terrorist act was reviewed, but the results are confidential.

• • Germany to shut down all the nuclear plants by 2022

This year, Germany decided to shut down all the nuclear plants by 2022. Environmental minister, Norbert Rottgen, said that seven of the oldest plans, whose shutdown had already been decided, as well as the Kruemmel plant, will no longer resume operations. Six others plants will be shutdown by 2021 at the latest, and the last three, the newest plants will be shut down by 2022.

Prior to the shutdown of the seven oldest nuclear plants, 23% of the total energy produced in Germany came from nuclear plants.

German chancellor, Angela Merkel, requested the reassessment of the nuclear plant program after the disaster in Japan, when the massive earthquake in March, followed by a tsunami, destroyed the nuclear plant of Fukushima, which resulted in radiation similar to the ones at Tschernobyl.

• • Ponta: The project of reactors 3 and 4 of Cernavodă must continue

Prime Minister Victor Ponta said that the project of the construction of reactors 3 and 4 in the nuclear-electric plant in Cernavodă must continue. He said that he is extremely "attuned" to the position of the environmental NGOs, but that Romania's energy independence is essential: "My opinion is that, in compliance with all the safety standards, the project of groups 3 and 4 in Cernavodă should continue. I am very attuned to the positions of the environmental NGOs, but for Romania, the energy independence and the ability to export energy are essential".