July 24, 2009

Financial Crisis Impact on Russia and Russia's Nuclear Energy Program

Russia will utilize 1.36 trillion rubles (US$43.7 billion) from its US$95.4 billion Reserve Fund in Q3 2009 in an attempt to finance its first budget deficit in nearly a decade. The reserve fund has fallen from US$137 billion at the end of 2008. (Bloomberg)

Russia has been drawing heavily from its sovereign wealth funds to finance its anti-crisis measures and its budget deficit. Russia's savings run a risk of being depleted by 2010 given the current trend.

Russia is planning a US$102 billion deficit in 2010

Russia will slow the pace of its nuclear power reactor construction program due to the financial crisis. Meanwhile, the country's president has laid down three priorities for Russia's nuclear industry.

Sergei Kiriyenko, director general of the Rosatom corporation, told a meeting of the Committee on Modernization and Technological Development of Economy that the rate of nuclear reactor construction in Russia would be reduced from two per year to just one.

"We are implementing the program of nuclear power plant construction in Russia in compliance with our task. The task has not been changed and we will have to build all of the 26 units stipulated by the program," Kiriyenko told the meeting at the Federal Research Institute of Experimental Physics in Sarov in the Nizhny Novgorod region.

In April 2007, the Russian government approved in principle a construction program to 2020 for electricity-generating plants. The program is designed to maximise the share of electricity from nuclear, coal, and hydro while reducing that from gas to make more available for export. This envisaged starting up one unit per year from 2009, two from 2012, three from 2015 and four from 2016. Present nuclear capacity is to increase at least 2.3 times by 2020.

However, he said, "now in the face of the financial crisis and declining energy demand, we have decided to put off the peak of the program for several years.

Russian President Dmitry Medvedev put forward three priority challenges for the country's nuclear power industry.

The first task, he said, was to improve the performance of pressurised water reactors over the next two to three years. The second, over the medium-term, is to develop a new technological basis for nuclear energy based on a closed fuel cycle with fast neutron reactors. Thirdly, the industry must develop nuclear fusion as a future energy source.

Medvedev optimistically called for a detailed timetable for the implementation of these programs to be submitted by the next meeting of the committee.

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