Romania Cancels Deal With Chinese Nuclear Power Company After Raising Concerns in January

June 2, 2020 Updated: June 2, 2020

The Romanian government requested state-owned energy company Nuclearelectrica to end its 5-year-old partnership with China General Nuclear Power Group (CGN), which intended to build two new 700-megawatt reactors at the country’s nuclear power plant in Cernavoda. The deal came under the government’s scrutiny earlier this year.

The Nuclearelectrica’s majority shareholder, the Romanian Ministry of Economy and Energy which owns 82.49 percent of share capital, formally requested that the shareholders repeal the current strategy for the expansion of Cernavoda nuclear plant, according to a company statement (pdf).

The Ministry authorized the company’s management to terminate negotiations with CGN, and terminate the effects of both the memorandum of understanding and the investor’s agreement with CGN, the statement said.

The company’s management was also requested by the Ministry to research and devise an alternative solution for constructing two new reactors at Cernavoda.

In 2015, Nuclearelectrica and CGN signed a memorandum of understanding on the construction of two new units (Units 3 and 4) at the Cernavoda Nuclear Power Plant, that had already been approved by the shareholders, Nuclearelectrica’s press statement said.

Bucharest signed a preliminary investors’ agreement with CGN in May 2019 to form a new joint venture company for an initial period of two years that would carry out the project of constructing two new energy units. The new company would be owned 51 percent by CGN and Nuclearelectrica would hold the remaining 49 percent, reported World Nuclear News.

The agreement was signed by the then-Energy Minister who served in the former Social Democratic (PSD) government led by Prime Minister Viorica Dancila which was ousted in October 2019.

Epoch Times Photo
A cut-away model of the Chinese Gen-III nuclear power technology HPR1000 by CGN is displayed at the World Nuclear Exhibition (WNE), the trade fair event for the global nuclear community in Villepinte near Paris on June 26, 2018. (Benoit Tessier/Reuters)

The total cost of the project was estimated at about 7.2 billion euros by CGN in 2016, according to Profit.ro. It was an increase in the official cost estimate at 6.5 billion euros that was based on the feasibility study conducted by Ernst & Young in 2012, reported Profit.ro.

Some technical and cost-related difficulties needed to be resolved before construction began, according to HotNews. The cost of constructing two new reactors is so high that some of it would need to be passed on to the energy consumers.

In October 2019, Dancila and former U.S. Secretary of Energy Rick Perry signed a Memorandum of Understanding of cooperation in the civil nuclear energy field.

The new government led by Ludovic Orban of the center-right National Liberal Party (PNL) criticized the agreement with CGN in January.

Romania’s Minister of Economy and Energy Virgil Popescu said in January 2020 that Nuclearelectrica could construct one new reactor by itself, but a more feasible option would be forming a partnership with a NATO ally, according to Balkan Insight.

Nuclear Deal With Chinese Company Under Scrutiny

The United States accused CGN of spying in 2016 but its deal with the Romanian company continued.

The deal came under scrutiny after the United States blacklisted CGN in August 2019 for its activity to acquire advanced U.S. nuclear technology.

No major developments took place in the project during the last five years and in January 2020, Ludovic Orban said the government could exit the deal with the Chinese firm.

Some Romanian officials raised their concerns about the terms of the Chinese investment and the trustworthiness of Chinese know-how, said Andreea Brînză, Vice President of The Romanian Institute for the Study of the Asia-Pacific, in her report in The Diplomat.

The European Union “wants to limit foreign investments, especially Chinese ones, in European critical infrastructure,” so it may also be concerned with the Chinese investment in Cernavoda, wrote Brînză.

The construction of the Nuclear Power Plant in Cernavoda started in the 1980s (in the communist era), however, its first reactor was put into operation in 1996 and the second one in 2007. Both reactors were supplied by the Atomic Energy of Canada (currently Candu Energy).

The Cernavoda power plant supplies 18 percent of Romanian electricity.