1. Nuclear Inter Jura 2014
ROSATOM
Rosatom State Nuclear Corporation
Legal aspects of the BOO model when developing new nuclear power plant and construction projects
Ilya Smirnov,
Deputy CEO, General Counsel
Olga Kirillova,
Senior Legal Counsel
Akkuyu NPP Power Generation JSC
21 October 2014 1

2. Factual background
AKKUYU NGS AŞ
ROSATOM
435 nuclear power plant units are under operation around the world
72 nuclear power plant units are under construction around the world (10 units – since 2013)
Only one NPP (4 units) is under construction under the BOO model
Помимо занятых в строительстве (только на строительной площадке в «пиковые годы» будет работать до человек одновременно), на АЭС будут задействованы более 2500 человек эксплуатационного персонала, а во время плановых ремонтов будут привлекаться еще около 1200 человек.

3. Types of project models
TOPICS COVERED
AKKUYU NGS AŞ
ROSATOM
Types of project models
Akkuyu NPP project structure
Major challenges
Lessons learned
Questions
Помимо занятых в строительстве (только на строительной площадке в «пиковые годы» будет работать до человек одновременно), на АЭС будут задействованы более 2500 человек эксплуатационного персонала, а во время плановых ремонтов будут привлекаться еще около 1200 человек.

4. Newcomers which way to follow Turkey Bangladesh Vietnam Jordan Nigeria
AKKUYU NGS AŞ
ROSATOM
which
way
to follow
Turkey
Bangladesh
Vietnam
Jordan
Nigeria
Belarus
Kazakhstan
Egypt …
Помимо занятых в строительстве (только на строительной площадке в «пиковые годы» будет работать до человек одновременно), на АЭС будут задействованы более 2500 человек эксплуатационного персонала, а во время плановых ремонтов будут привлекаться еще около 1200 человек.

5. Akkuyu Project Features
Akkuyu Nuclear Power Plant is the First Rosatom BOO Construction Project Outside Russia
AKKUYU NGS AŞ
ROSATOM
Akkuyu Project Features
First Nuclear Power Plant in Turkey
First Rosatom ВОО (build-own-operate) project. Under the IGA, Rosatom is responsible for engineering, construction, operation and maintenance of the plant.
Legal basis: Intergovernmental Agreement, May 12, 2010
Project design: AES-2006 (VVER-1200)
Total capacity: 4,800 MW. (4 x 1200 MW)
Implementation period:
Total cost ~ $ 20 bln
Power Purchase Agreement for 15 years, fixed price terms
Support of the Russian and Turkish Governments
Maximization of Turkish personnel involvement in construction and operation of the plant.
Job creation potential – up to for the construction only
Akkuyu site, Turkey
Помимо занятых в строительстве (только на строительной площадке в «пиковые годы» будет работать до человек одновременно), на АЭС будут задействованы более 2500 человек эксплуатационного персонала, а во время плановых ремонтов будут привлекаться еще около 1200 человек.

6. Project Cooperation Between Russia and Turkey Covers a Wide Range of NPP Related Construction, Operation and Infrastructure Issues
AKKUYU NGS AŞ
ROSATOM
Russian / PC responsibilities
Joint responsibilities
Turkish responsibilities
NPP engineering, design field supervision
Construction and assembly works
Site allocation
Construction management/
Supervision /Startup and Commissioning
Infrastructure development, grid connection
Physical protection
Design documentation
Emergency planning
Site infrastructure
Nuclear island and other
special equipment and materials
Public outreach
Fuel supply
Spent fuel management (subject to a separate IGA to be concluded)
Ownership of NPP until decommission
Operation, maintenance and upgrade
Wholesale of electricity
Decommissioning and decontamination
Financing
Nuclear liability insurance
Radioactive waste disposal / treatment

7. Project organization structure
AKKUYU NGS AŞ
ROSATOM
Rosatom State Corporation
Board of Directors
(shareholders)
Project sponsor
PC management
General responsibility for Project implementation
Rusatom Overseas CJSC
Shareholder/ developer
Akkuyu NPP JSC
Tailor-made JSC incorporated in Turkey. Carries functions of customer, license applicant, NPP owner and GR coordinator in Turkey
Operator, Owner of the NPP and electricity produced
Owner’s Engineer*
OJSC «INTERRAO
Worley Parsons»
Rosenergoatom Concern OJSC
Technical expertise
Cost control
Schedule control
Quality control
Technical customer
Licensing consultant
Development of technical assignment for the design documentation
Technical acceptance of equipment and services at all stages of project commissioning, NPP operation
EPC 1**
Hydrotechnical
EPC 2**
Nuclear island
EPC 3**
Turbine island
EPC 4**
Auxiliary buildings
* Tender will be tentatively run in 2014
** EPC structure to be further discussed 7 7

8. Equity Structure JSC “Concern Rosenergoatom”
AKKUYU NGS AŞ
ROSATOM
Paid Capital – 4.36 Billion TL (source – Russian budget)
JSC “Concern Rosenergoatom”
JSC “Atomstroyexport”
JSC “Inter Rao”
JSC “Atomenegroremont”
JSC “Atomtehenergo”
JSC “Rusatom Overseas”
Future New shareholder - investor (up to 49 % of shares)
Current Shareholders of AKKUYU NPP JSC
Subject to consent to the Turkish Party under IGA 8

9. Akkuyu NPP JSC registration Electricity generation license
Stages of the project
Preparation
Construction
O&M
Decommissioning
Single responsibility of the “Project company” for all stages of the project and deadlines
1 stage
2 stage
3 stage
4 stage
13/12/10
2017
Akkuyu NPP JSC registration
03/11
1st concrete
2083
2017
Start site survey
Commissioning
2023 – 1 unit
2024 – 2 unit
2025 – 3 unit
2026 – 4 unit
Construction license,
Electricity generation license 9

10. Lessons learned: Regulatory
challenges
New electricity law market
No experience of the Turkish Party in regulating and licensing of NPP
The comprehensive Nuclear Energy law and the Law of Civil Liability for Nuclear Damage need to be adopted
Challenges in understanding of local regulations and their implementation
Lack of understanding of “nuclear” by government agencies and companies
Possibility of changes in regulations without consent of NPP owner
Public fear of nuclear 10

11. Lessons learned: Regulatory
Setting up regulatory base prior to licensing
Acceptance of the regulatory base of the supplier country in case of lack of host country base
Established effective system of consultations with government bodies and relevant agencies
Working groups on the key issues of project implementation and NPP operation
INIR mission to Turkey (November 2013)
Work with public opinion
Student’s education, training for officials, regulatory bodies’ personnel
Assistance in development of regulatory basis and regulatory agency expertise
SOLUTIONS 11

12. Lessons learned: Host Country Undertakings
Challenges
No responsibility of the host country for
Issues touched upon by the IGA but referred to separate IGA’s that may be concluded in the future
Meeting deadlines in decision making which may lead to schedule delays
Reprocessing spent fuel of Russian origin in the RF
Cost overruns in case of delayed construction
Cooperation regarding the nuclear fuel cycle 12

13. Lessons learned: Host Country Undertakings
Setting forth the financial responsibility of the host country for ensuring infrastructure solutions (INIR)
Local government owned companies among equity partners
Country guarantees to purchase fixed amount of electricity at a pre-determined price
Alternative to treasure guarantees – entering into a Host Government Agreement
Negotiating follow up IGA’s or Host Government Agreements 13

14. Lessons learned: Amending local laws
IGA
The parties shall as permitted by the applicable laws and regulations of the RF and the Republic of Turkey support and cooperate with the Project Company in connection with the Project
Local laws
Law N 3573 on Reclamation of Olive Cultivation and Fertilization of the Wild Olive Growths
Law N 3621 on Coasts
Decree on State Incentives in Investments N 2012/3305 14

15. Strategy of Operating the NPP
Open Issues
AKKUYU NGS AŞ
ROSATOM
Option
Challenges and Limitations
1: Who is employed at the NPP?
% Akkuyu staff
1. Development and implementation of business processes
2. Language of operation (initially Russian) vs language of examination for licensed operators (???)
3. Recognition of diplomas and engineering qualification
4. Licensing in Turkey of the personnel educated in Russia
1.2. Own operating staff, outsourced supporting staff
2: Who provides outsourced services?
2.1. Concern Rosenergoatom
1. Contract to provide operating services
2. Authorization by TAEK
3. Liability (incl. nuclear) of the service provider
4. Requirements of TAEK to be developed
2.2. Foreign provider 15

16. Strategy of Operating the NPP
In-house vs. Outsource
AKKUYU NGS AŞ
ROSATOM
Own Operating Personnel
Outsourced Services (while retaining knowledgeable customer capability):
Physical Protection (except for own Security Service)
Administrative and supporting functions
Repair and maintenance work, replacement of spent fuel
Transportation logistics
Retail sale of electricity
Rad waste management
Training of personnel
Metrology and monitoring 16

17. General Considerations
HR Strategy
General Considerations
AKKUYU NGS AŞ
ROSATOM
General Considerations
Safety
Quality
Economic Efficiency
Industry benchmarking
Availability of qualified local personnel in Turkey
Staffing:
Deputy CEO for Operations (new open position introduced into the org.structure)
His direct reports:
Chief Engineer
Director for Safety and Quality Control – dotted line reporting to the CEO 17

18. HR Strategy Open Issues
AKKUYU NGS AŞ
ROSATOM
Local staff vs Expats?
What is the optimal headcount of the NPP (currently 0.8 person per 1 Mwt)?
Where shall we hire people from?
How Much – Where – When: What level of personnel localization in different categories of employees can (should) be achieved at the initial phase, in 5 years and in 10 years?
Development of specialized higher education in TR vs training at the Akkuyu Training Center
Program of training of licensed personnel (required for application to TAEK for the construction license – burning issue for Q1 2015) 18

19. ROSATOM
AKKUYU NGS AŞ
AKKUYU NGS AŞ
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