Rosatom makes nuclear history in Egypt

Russia’s global energy giant, Rosatom, is building Egypt’s first nuclear power plant (NPP) for $30bn, at the behest of the Egyptian government.

The NPP will be located in El-Dabaa, 130km north-west of Cairo and adjacent to the Mediterranean Sea, the plant’s cooling source. The site has been earmarked for a nuclear plant since the 1980s, although political crises have delayed it.

Egypt’s population of 90 million, vast electricity demands and strong relationship with Russia led the two country’s presidents to meet in 2015 and pledge a nuclear partnership alongside the ‘fight against terrorism’. Russia’s growing influence in the Middle East and north Africa since the Syrian war lends great political significance to the NPP, which is the largest joint project between Egypt and Russia since the opening of the Aswan Dam in 1970.

Rosatom’s advantage

El-Dabaa represents the largest non-feedstock deal in Russian history and, when commissioned in 2026, will be the first nuclear plant in North Africa and the second on the whole African continent. Its price tag is $30bn, 85% of which is a loan from the Russian state while Egypt provides the remaining 15% in the form of installments. Following bids by three companies in mid-2015, Egypt awarded the contract to state-owned Rosatom and signed the formal notice to proceed in December 2017.

Alexander Voronkov, director of Rosatom Middle East and North Africa, says Rosatom won the bid “because we are a global leader in the nuclear industry, offering cutting-edge Generation 3+ reactor technology that has been tried and tested and is successfully operating in Russia”. 

He adds: “Another advantage is that our integrated offer has no equivalent in the world, which enables us to provide turnkey solutions and the full range of nuclear services, from NPP construction to its decommissioning… [that] spans the NPP’s entire lifecycle [of] 70 to 80 years.”

Mr Voronkov also emphasises the two countries’ long history of co-operation in the nuclear field that goes back 60 years. Egypt’s first nuclear research reactor, the country’s first step towards developing its future nuclear programme, was built by Russian scientists. Numerous Egyptian specialists at the time benefited from the Soviet science and research experience.

The impact of El-Dabaa

NPPs can boost economic growth and development, pulling millions of people out of energy poverty, creating jobs and strengthening growth in the hi-tech sector. They also promote low-carbon economies and diversify countries’ energy portfolio – vital for oil-dependent or energy-importing nations – while also guaranteeing the price of electricity for its entire operational lifetime.

Mr Voronkov says El-Dabaa will significantly boost Egypt’s GDP, create up to 2000 construction jobs and increase the quality of human capital through professional education. Rosatom will assist Egypt both in the training of NPP personnel and future nuclear scientists. Dozens of Egyptian students are already studying at Russian technical universities.

Other significant benefits Mr Voronkov highlights are “local companies’ involvement in the supply chain”, directly and indirectly, and “tax revenues from the project – with an NPP typically becoming the largest taxpayer in the region – [driving] growth in the population’s purchase power and, consequently, growth in orders for industries servicing consumer demand”.

He adds that “the development of nuclear technologies will open up opportunities for a wide range of their non-power applications, including seawater desalination, nuclear medicine, agricultural irradiation and much more. The El-Dabaa project is, therefore, considered to mark the dawn of a new era not just for Egypt’s energy sector but for the country overall.”

More locally, NPP will also stimulate the development of the region surrounding the future plant, says Mr Voronkov. Currently barren desert, it could become a new tourism cluster.

Fears assuaged?

When asked if politics could derail El-Dabaa’s construction and output, Mr Voronkov says: “We are talking long-term projects, which is why nuclear power, alongside nuclear science and nuclear and radiation safety, historically remain outside the current political discourse and relations between countries.”

He adds that between 1993 and 2013, during the global Megatons to Megawatts Program, “there was significant instability in US-Russian political relations, but not for a moment did that affect or hamper implementation on either side of the Atlantic”.

Despite the current presidential elections, political risk is fairly low in Egypt. “We can expect zero impact on policy from this election. The army continues to occupy prime political position,” says Hasnain Malik, global head of equity research at developing markets investment bank Exotix Capital.

Segments of the Egyptian populace have voiced fears surrounding the risks of nuclear energy at El-Dabaa. Consequently, says Mr Voronkov, Rosatom and its Egyptian partners “are currently planning activities aimed at driving public acceptance of nuclear power in the country. We have accumulated years’ worth of experience in this type of education, drawing on the world’s best practices, and are ready to provide any support necessary in aiding the Egyptian side’s efforts in educating the local population on the benefits of nuclear energy”.