Russian Federal Prosecutors have accused a company owned by the country’s nuclear energy corporation, Rosatom, of massive corruption and manufacturing substandard equipment for nuclear reactors under construction at home and abroad.
Carnegie Endowment study argues that Rosatom bribed political elites to get contracts where it constructed a nuclear power plant.
The ZiO-Podolsk machine building plant’s procurement director, Sergei Shutov, has been arrested for buying low quality raw materials on the cheap and pocketing the difference as the result of an investigation by the Federal Security Service, or FSB, the successor organization to the KGB.
Russian Federal Prosecutors have accused a subsidiary of Rosatom, the country’s state-owned nuclear energy corporation, of corruption and knowingly selling inferior equipment manufactured for nuclear reactors.
It is not clear how many reactors have been impacted by the alleged crime, but reactors built by Russia in India, Bulgaria, Iran, China as well as several reactor construction and repair projects in Russia itself may have been affected by cheap equipment, given the time frame of works completed at the stations and the scope of the investigation as authorities have revealed it.
“The scope of this scandal could reach every reactor in Russian and every reactor built by Russia over the past several years and demands immediate investigation,” said Bellona President Frederic Hauge. “Were is the political leadership in the Russian government to deal with such a crime?”
Hauge expressed outrage that an alleged crime of such a massive scale was not leading to immediate action to check each reactor that may have been affected by the profit pocketing scheme, and he was frustrated that the FSB and prosecutors were not naming specific reactors that may be involved.
“As long as the Russian government is not investigating this case correctly, we will have to ask international society to do it,” he said. “Bellona will be taking further action in this case.”
Vladimir Slivyak, co chair of Russia’s Ecodefense agreed.
“Stopping and conducting full-scale checks of reactors where equipment from ZiO-Podolsk has been installed is absolutely necessary,” said Slivyak. “Otherwise [there is] the risk of a serious accident at a nuclear power plant with cleanup bills stretching into the tens and even hundreds of millions of dollars [that] will have to be footed by taxpayers.”
The criminal case against ZiO-Poldolsk was opened in December, but information about the investigation was released in the Russian media via the official Rosbalt agency only last week—a common circumstance in FSB-associated investigations.
The charges levelled against ZiO-Podolsk, Russia’s only manufacturer of steam generators for nuclear plants built by Rosatom domestically and by its international reactor construction subsidiary Atomstroiproyekt, are a staggering blow to Rosatom’s credibility.
ZiO-Podolsk is a 2006-founded subsidiary of Atomenergomash, which was acquired by 100-percent state-owned Atomenergoprom in 2007. Atomenergoprom is a part of Rosatom.
But the paperwork is rather a technicality for a machine shop that has been involved with the nuclear industry since its inception. Founded in 1919, ZiO-Podolsk produced the boiler for the first electricity-producing nuclear reactor at Obninsk in 1952 and has produced the boilers for every Russian reactor built since.
Rosatom projects
Rosatom’s projects and involvement have varied in ambition and cost—from India’s Tarapur nuclear power plant (NPP) (US$700 million), Bangladesh ($12.65 billion) and Iran’s Bushehr-1 (US$850 million) to a gargantuan project in South Africa (US$76 billion) and those in Egypt (US$30 billion) and Turkey (US$20 billion). Finally, 13 countries have a variety of research-oriented agreements with Russian nuclear service providers related to nuclear research centres.
A Carnegie Endowment study argues that Putin and Zuma were the primary beneficiaries of the embezzlement of billions from Rosatom projects in South Africa. The former had an opportunity to expand his presence in Africa, choosing the continent’s most prosperous and influential country. In contrast, the latter could enrich himself at the project’s expense.
Western sanctions, energy as weapons
The big question for the future is whether non-Western countries will also turn away from Russian nuclear power. Currently, many developing countries take a positive view of Russia and tilt towards its view of the conflict in Ukraine. Immediately after the invasion of Ukraine, seven of the 14 countries with high- or medium-cooperation levels in our analysis did not approve United Nations Resolution ES 11/1 condemning Russian aggression, and several of these (for example, Bangladesh, China, India, Iran) were categorized as ‘neutral or Russia-leaning’ shortly after the war began. Over time, however, the interruption of energy supplies to the European Union may undermine the reputation of Russian energy companies as primarily economic actors independent of national security politics, also outside Europe. Non-Western perspectives on the war in Ukraine and the reliability of Russia and Russian technology may also change over time.
ZiO-Podolsk- shoddy company
According to prosecutors, ZiO-Podolsk began shipping shoddy equipment in 2007 or perhaps earlier. This has implications for the safety of nuclear power plants built by or that bought equipment from Rosatom in Bulgaria, China, India, Iran, Bangladesh, Belarus and Russia—striking a chord of outrage and distress among environmental groups.
A source told Bellona on the condition of anonymity that ZiO-Podolsk is also making critical parts for the reactor pressure vessel and other main equipment for the BN-800 fast reactor at Beloyarsk Nuclear Power Plant in Russia’s Sverdlovsk Region in the Urals.
According to the London-based World Nuclear Association, the machine works giant is also making steam generators for Russia’s Novovoronezh, Kalinin, and Leningrad Nuclear Power Plants and Belene in Bulgaria.
Rosbalt reported that the case against ZiO-Podolsk involves the embezzlement of state funding intended for the purchase of raw materials compatible with contemporary safety standards for nuclear reactors.
The FSB investigation
According to the FSB investigation – which was described in unusual detail by the news wire – procurement director Shutov allegedly purchased low-grade steel for equipment in collusion with ZiO-Podolsk’s supplier AТОМ-Industriya. That company’s general director, Dmitry Golubev, is currently at large after embezzlement charges were filed against him by the same Moscow court that ordered Shutov’s arrest, Rosbalt quoted FSB sources as saying.
The FSB told Rosbalt that the scheme between Shutov and Golubev allegedly involved Shutov turning a blind eye to inferior-quality steel in return for a large portion of the profits reaped by ATOM-Industriya. The security service cited transactions that were accounted for in bookkeeping documents it confiscated from the financial director of ATOM-Industriya.
“This company purchased cheap steel in Ukraine and then passed it off as [a] more expensive [grade]; the scam’s organizers shared the revenues,” an FSB source was quoted by Rosbalt as saying.
FSB agents said that ATOM-Industriya produced some 100 million robles ($220.5 million) worth of pipe sheets, reactor pit bottoms, and reservoirs for ZiO-Podolsk – equipment that was delivered to Russian and foreign reactors – including an order of so-called tube plates for high-pressure heaters at Bulgaria’s Kozloduy NPP. High-pressure heaters are used to improve power output efficiency while having no relation to the safe operation of reactors.
Bulgarian plant expressing concern
When Rosbalt ran its detailed story last week, the management of Kozloduy NPP quickly responded by releasing an early statement saying its two heaters had been “functioning flawlessly” since their installation dates in 2010 and 2011.
A statement released 10 hours later that day carried by a different news agency, however, reported that Kozloduy NPP CEO Alexander Nikolov had sent off a letter to ZiO-Podolsk and Atomstroiexport demanding that they certify the quality of the metal in the heaters.
The FSB alleged to Rosbalt that the use of shoddy steel in the heaters manufactured for Kozloduy NPP alone netted ATOM-Industriya a black profit of 39 million roubles ($100 million).
FSB hid corruption and contract details
Ecodefense’s Slivyak said he believed the Rosbalt report and its copious quotations from the typically secretive FSB to be on the level.
Aside from the suspicions raised by Kozloduy NPP, Slivyak also said that the Russian-built Tianwan Nuclear Power Plant in China had previously complained to Rosatom with over 3,000 grievances regarding the low quality of materials delivered to construct the plant, lending credence to the FSB’s version of events.
Slivyak further noted the FSB, which functions as an attack dog for the government of Vladimir Putin, has nothing politically to gain by giving Rosatom – a pet corporation in Putin’s “power vertical” – a black eye.
The week following Robalt’s article, Rosatom, which had previously refused comment, and Atomenergomash, released a bristling denial as interesting for what it does say as for what it leaves unsaid.
“Rosatom and Atomenergomash deny information related to substandard equipment at nuclear power station that ZiO-Podolsk delivered,” read the joint statement. The companies say that “all possible announcements about unsuitable production quality at ZiO-Podolsk are knowingly incorrect and mistaken.”
The statement continued, “A stringent multi-layered system of quality control is in place at ZiO-Podolsk, encompassing all levels of production: from expert evaluations of received materials and ores to final inspection of products. Evaluations of the compliance of equipment’s quality delivered to foreign nuclear power stations are carried out by the authorized organization OAO Zarubezhatomenergostroi.”
However, the joint statement failed to contradict information supplied to Rosbalt by prosecutors concerning the arrests of upper-management officials at ZiO-Podolsk and ATOM-Industriya.
Two FSB spokesmen contacted by Bellona confirmed the version of events their colleagues described to Rosbalt but refused to discuss “an ongoing investigation” further. They also refused to comment on what other nuclear power plants besides Kozloduy may have been affected by defective materials from ZiO-Podolsk.
A spokesman for Russia’s Prosecutor General’s office refused to discuss the case, also because the investigation into the allegations continues. The joint Rosatom-Atomenergomash statement avoids adressing altogether assertions made by law enforcement sources to Rosbalt.
A source with ATOM-Industriya told Rosbalt that his company had experienced a similar legal wrangler in 2010, but the case was dismissed due to the lack of evidence of a crime.
“Now, more than a year later, prosecutors have brought charges,” he told Rosbalt, protesting his company’s innocence.
“We have done nothing illegal – our innocence has been confirmed in the arbitration courts,” he said.
Bellona’s Hauge said that “this is a real case for Russia’s security services to work on—instead of harassing the environmental movement.”
Bangladeshi nuclear power plant
Beneath the glitz of media propaganda, former prime minister Sheikh Hasina and her family members have benefitted from the nuclear power plant project by embezzling more than $5 billion as kickbacks to purchase Soviet-era nuclear reactors from Russian Rosatom. The power plant is overpriced, with a whopping construction cost of $12.65 billion.
Russia assisted former prime minister Hasina in siphoning this $5 billion to various Malaysian banks from various Russian slash funds kept in the Malaysian banks.
Egyptian nuclear power plant
Egypt launched the construction of the fourth and final reactor in the country’s first nuclear power plant.
Egyptian President Abdel-Fattah al-Sisi and his Russian counterpart Vladimir Putin virtually attended the pouring of the new reactor in the Dabaa Nuclear Power Plant (DNPP), the state-run Al-Ahram newspaper reported.
Sisi termed the construction of the new reactor as a “new achievement in bilateral cooperation with Russia.”
“The fourth unit of the nuclear station allows Egypt to begin the next phase of building nuclear reactors,” he added.
Putin, for his part, said the DNPP is one of the most important projects that contribute to boosting the Egyptian economy and energy generation. Located in Dabaa in northwestern Egypt, the DNPP is being built by Russia’s state nuclear power company Rosatom.
The power plant will include four reactors with a capacity of 1.2 GW each. Egypt’s Nuclear Power Plants Authority (NPPA) and Rosatom began building the first and second reactors in 2022 and laid the foundation for the third reactor in May 2023.
The total cost of the nuclear power plant is estimated at $30 billion. Egypt expects the power plant to be fully operational by 2030.
One country in particular has embraced a partnership with Rosatom: Egypt. In 2015, Russia and Egypt concluded an intergovernmental agreement that led Rosatom to build a $30-billion nuclear power plant near the Mediterranean coastal town of El Dabaa, about 170 kilometers west of Alexandria. With four Russian-designed, 1.2-gigawatt, VVER reactor units, the El Dabaa nuclear power plant is expected to generate more than 10 percent of total electricity production in Egypt and provide a consistent baseload power source for 20 million people.
Chinese nuclear power plant
Beijing has moved one step closer to promoting sustainable energy and cleaning up the region’s infamous air pollution, due to the extensive burning of coal for heating and power generation.
According to a report in Nuclear Engineering International, China National Nuclear Power (CNNP), a subsidiary of China National Nuclear Corporation (CNNC), announced the start of the construction of unit 3 of the Xudabao NPP.
Construction of the US$1.7 billion Xudabao 3 project in Liaoning province officially started on July 28 with the pouring of the first concrete for the nuclear reactor island, the report said.
It is one of four VVER-1200 reactors being built by Russia’s Rosatom in China under a 2018 agreement at a reported cost of $3.62 billion, the biggest nuclear energy deal between the two countries over the last decade.
CNNP noted that, with the pouring of the first concrete, it now has six reactors under construction with an installed capacity of 6.258 GWe (Gigawatt electrical power), the report said.
Russia’s Atommash plant has also announced the start of production of the main components for Xudabao 3.
In May this year, Russian President Vladimir Putin and Chinese counterpart Xi Jinping hailed close industrial ties via video-conferencing.
“Russian and Chinese specialists are implementing a truly landmark flagship joint project,” the Kremlin cited Putin as saying.
The Russian leader described the nuclear reactors as “powerful” and “modern,” saying they meet all safety requirements and the highest environmental standards.
“We can say that Russian-Chinese relations have reached the highest level in history,” Putin said.
In his speech, China’s Xi Jinping called nuclear energy a “strategic priority for cooperation” between the two countries.
Xi called for a “more equitable, balanced, inclusive, open and shared global energy governance system,” adding that Beijing and Moscow should “play a constructive role in achieving global sustainable development goals.”
In June 2018, Russia and China signed four agreements for the construction of two VVER-1200 reactors as units 7&8 at the Tianwan NPP in Jiangsu province and two more to be built as units 3&4 at the new Xudabao NPP site in Huludao, Liaoning province.
Further agreements signed in June 2019 included a general contract for the construction of Xudabao 3&4, as well as a contract for the supply of nuclear fuel, the report said.
Russia’s state nuclear corporation Rosatom is involved in the construction of four nuclear-generating units in China — two VVER-1200 reactors as unit 7&8 at the Tianwan NPP in Jiangsu province (pictured) and two more to be built as unit 3&4 at the new Xudabao NPP site in Huludao, Liaoning province. Photo: AFP / Sputnik / Rosatom.
Under the VVER-1200 standard, the nuclear part of the plant is housed in a single building acting as a containment structure, with improved emergency core cooling and backup diesel power supply and feed water systems that rely on water tanks built on top of a containment dome.
There is also a “core catcher” to contain the molten reactor core in the event of a severe meltdown.
The People’s Daily noted that the trial of the VVER-1200 technology would add to China’s status as a testing ground for the world’s third-generation nuclear reactors, complementing China’s indigenous third-generation Hualong reactor technology.
Rosatom will design the nuclear island and supply key equipment, as well as provide installation supervision and commissioning services for the equipment. China will supply turbine generators for the plants.
The power units are expected to be commissioned in 2027-2028.
The report said Russia’s Atommash will manufacture and supply two VVER-1200 reactors, two sets of steam generators, reactor cooling pumps, a main circulation pipeline, and two compressors.
Moscow has sought influence and closer diplomatic ties via its nuclear power stations, which have a price advantage over Western competitors.
In recent years, it has notably pushed for greater clout in Africa, signing preliminary agreements with a host of countries, including Egypt, Nigeria and Sudan.
The new reactor was designed at Kurchatov Institute (Moscow) and OKB Gidropress (Podolsk) and is manufactured by Atommash (Volgodonsk).
Capable of withstanding an SL-2 earthquake, the design provides for a fuel burnup of up to 70 MWd/kgU (megawatt-days per metric tonne).
VVER-1200 can be optionally matched with a half-speed turbine and operate in a load-following mode.
Many modifications have been made to reactor internals (core barrel, core baffle, protective tube unit and sensors) to prevent accidents and extend the service life to 60 years. The reactor is also designed to accommodate MOX fuel.
According to Joseph Jacobelli, an independent energy analyst and Asia-Pacific CEO of clean energy producer Joule Power, China will continue exploring all the technologies available, including Westinghouse Electric’s AP1000 and the French-designed EPR.
“China does not solely want next-generation Russian nuclear power technology. The nation’s operators have been looking, and will continue to seek, a variety of options,” he said.
“The country wants a sizeable uplift in nuclear-installed capacity in the coming decades but wants to ensure an efficient and safe development so it will remain open to all solutions and not focus on just one type of technology.”
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