Romania Concerned Over Its Partnership With Chinese Nuclear Power Company

CGN Accused of Espionage and Blacklisted in the US
January 28, 2020 Updated: January 28, 2020
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The Romanian government expressed its concern over Romania’s 5-year-old partnership with a Chinese company, China General Nuclear Power Group (CGN), to build two new 700-megawatt reactors at the country’s nuclear power plant in Cernavoda. CGN has been accused of espionage and blacklisted by the United States.

“It’s obvious to me that the deal with the Chinese won’t work … We will see with which partner we’ll associate to [build reactors]. It is about partnering and financing,” Romania’s Prime Minister Ludovic Orban told Hot News, in a video interview on Jan. 19, referring to Romania’s deal with CGN. Orban added that all of Romania’s energy deals will, from now on, depend on the European Green Deal.

Plans to Expand and Modernize Cernavoda Nuclear Power Plant

The construction of the Nuclear Power Plant in Cernavoda started in the 1980s, however, its first reactor was put into operation in 1996 and the second one in 2007. Both reactors were supplied by Atomic Energy of Canada (currently Candu Energy). The Cernavoda power plant supplies 18 percent of Romanian electricity.

In 2014, Nuclearelectrica, the Romanian company that currently operates the Cernavoda power plant, chose CGN as an investor for the development of two new nuclear power units, according to Balkan Insight. CGN was “the only bidder in the tender procedure organized by Nuclearelectrica,” says Balkan Insight.

In 2015, state-owned Nuclearelectrica and CGN signed a memorandum of understanding on the construction of two units (Units 3 and 4) at the Cernavoda Nuclear Power Plant,  Nuclearelectrica reported.

With plans to build two new energy units, the plant will double its capacity, which will not only have a regional impact but will also transform Romania from an importer of electricity to an exporter.

The project to expand the Cernavoda Nuclear Power Plant has entered a new phase, after Bucharest signed a preliminary investors’ agreement with the Chinese nuclear power corporation CGN in May 2019, according to World Nuclear News.

According to the agreement signed between Romania and China, a new joint venture company should be established within 60 business days to carry out the project of constructing two new energy units, each with a capacity of 700 MWe. The new company will be owned 51 percent by CGN, and Nuclearelectrica will hold the remaining 49 percent, reported World Nuclear News.

The agreement has not provided the cost of the investment, but Romanian media reported that the estimated cost could be about $7.7 billion (7 billion euros), according to Nuclear Engineering International.

The agreement did not stipulate that the construction would begin shortly after. Romanian Minister of Energy Anton Anton, who signed it, said that over the next two years, the parties “will define the structure of the project continuation model,” as quoted by HotNews.

Also, some technical and cost-related difficulties need to be resolved before construction begins, 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.

Also, the existing unit 1 in the Cernavoda plant requires refurbishing, a high priority project for Nuclearelectrica that will cost $1.65 billion (1.5 billion euros), according to the same source.

Liberal party President Ludovic Orban (L) and Romanian President Klaus Iohannis wave on stage during an European Parliament electoral rally in Bucharest, Romania on May 18, 2019. (Vadim Ghirda/AP Photo, File photo)
(L) Then Liberal party President and current Romanian Prime Minster Ludovic Orban and (R) Romanian President Klaus Iohannis wave on stage during a European Parliament electoral rally in Bucharest, Romania on May 18, 2019. (Vadim Ghirda/AP Photo, File photo)

Deal With China’s CGN Under Scrutiny

Romania’s President Klaus Iohannis and President Donald Trump discussed the cooperation of both states in the civilian nuclear industry in Washington in August 2019, and both presidents agreed that “industries [of both countries should] work closely together to support Romania’s civil nuclear energy goals,” says the joint statement.

A month later, former U.S. Secretary of Energy Rick Perry and former Romanian Prime Minister Viorica Dăncilă signed a Memorandum of Understanding of cooperation in the civil nuclear energy field.

Some Romanian officials raised their concerns about the terms of the Chinese investment and the trustworthiness of Chinese know-how. Especially after the United States accused CGN of spying in 2016 and blacklisted them in the United States in 2019, 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.

Epoch Times Photo
A cut-away model of the Chinese Gen-III nuclear power technology HPR1000 by China General Nuclear Power Corporation (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)

CGN, along with its three subsidiaries, were blacklisted in the Federal Register because they “have been determined by the U.S. Government to be acting contrary to the national security or foreign policy interests of the United States,” effective Aug. 14, 2019. The Federal Register notice explains that “each of these four Chinese entities has engaged in or enabled efforts to acquire advanced U.S. nuclear technology and material for diversion to military uses in China.”

This blacklisting prohibits American companies from doing business with CGN and its divisions unless they get special approval from the U.S. government, reported Bloomberg.

In 2016, Chi­na Gen­er­al Nuclear Pow­er (CGNPC)—a subsidiary of CGN—was accused of “lead­ing efforts to steal U.S. nuclear tech­nol­o­gy,” according to RWR Advisory Group.

CGNPC’s senior advi­sor, Allen Ho, was indicted for nuclear espionage in April 2016 and sentenced to 24 months in prison in 2017. He had recruited U.S.–based nuclear experts to provide illegal “assistance in developing and producing special nuclear material in China for a Chinese state-owned nuclear power company” from 1997 to 2016, according to a statement from the Department of Justice.

In 2009, Ho tried to recruit a U.S. nuclear expert and was caught saying, “Chi­na has the bud­get to spend. They want to bypass the research stage and go direct­ly to the final design and man­u­fac­tur­ing phase.”

Iohannis said in a discussion with journalists, analysts, and political scientists at the Central University Library in Bucharest on Nov. 19, that the project and agreement for construction of two new units at the Cernavoda plant would be reviewed by the Romanian Supreme Council of National Defense (CSAT), reported Universul.net. “We will analyze them very carefully in the CSAT together with the new government and make the necessary decisions, so as to guarantee national security,” Iohannis said.

The project to add two units to Cernavoda Power Plant had been previously evaluated and approved by CSAT in May 2016, after the United States accused a CGN subsidiary of espionage.

“From the beginning, our place of Romania … is in the Euro-Atlantic sphere, in the Euro-Atlantic sphere of values, we belong there. …With China, we can have trade, economic exchanges, but we do not consider ourselves a part of the sphere of values promoted by them, we have no historical obligations to them,” Iohannis said, according to Universul.net. “So I don’t think we can ignore certain signals, we don’t have to go too far in the area of collaboration with Asian states,” he added.