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					FOREIGN TRADE POLICY AND AUTHORIZED
   FOREIGN TRADE ENTITIES OF THE
 MINISTRY OF RUSSIAN FEDERATION FOR
           ATOMIC ENERGY
  JOINT STOCK COMPANY “TECHSNABEXPORT”, OPEN TYPE
JOINT STOCK COMPANY “ATOMSTROYEXPORT”, CLOSED TYPE
        JOINT STOCK COMPANY “TVEL”, OPEN TYPE




                   Annual Analytical Survey
                          Issue # 1,




            International Business Relations Corporation
         Department of Nuclear Energy & Nuclear Fuel Cycle

                           Moscow, 2003
                                                                                              2

About International Business Relations Corporation (IBR)

International Business Relations Corporation (IBR) was established in 1991 by a group of
managers, engineers and scientists working at state enterprises and governmental bodies of
nuclear-industrial and space-industrial complexes of the former USSR. IBR was established
as the consulting and engineering organization acting in the field of high technologies (energy,
space, environment). The company started with three departments in its structure (Nuclear
Energy & Nuclear Fuel Cycle Dept., Space Technology Dept., Business Travel Dept.). In 1993
the Environmental Technologies Department was formed as an answer to a growing interest
of foreign firms to Russian developments in this area. In 1994 within IBR was formed the
Business Support & Promotion Department aiming at providing a broad scope of services to
foreign and domestic companies and organizations in promoting their business at the Russian
and former-USSR markets. In 2000 with an increase in the interest of foreign firms in a
broader spectrum of Russian high technologies IBR undertook certain reorganization
measures. As a result the Space Technology and Environmental Technologies Departments
were merged into the High Technologies Department with the responsibilities extended to
other high industrial technologies e.g. biotechnologies, fossil energy, etc. The two-years
practice of the High Technologies Department demonstrated the timeliness and
appropriateness of such reorganization.

Now International Business Relations Corporation (IBR) is an experienced, steadily operating
and developing company. The IBR personnel possessing perfect knowledge of the Program &
Project Management is in a position to solve the most complicated tasks in various fields of
research and industry.

IBR is proud of its collaboration with the national and overseas partners including many
worldwide known companies and organizations. With the experience of its staff International
Business Relations Corporation is looking forward for continuous partnerships and
encouragement.




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                                                                                              3

Abstract

The survey provides the description and analysis of state-of-the-art in external trade system of
the Ministry for Atomic Energy of the Russian Federation (Minatom), presents the general
chart of external trade activities in the field of atomic energy use, provides an analysis of
Minatom‟s external trade policy and its formation principles, gives the list of basic trends in
Minatom‟s foreign trade operations.

More detailed consideration and analysis are provided for Minatom‟s authorized foreign trade
entities which are currently Joint Stock Company "Techsnabexport" (TENEX); Joint Stock
Company "Atomstroyexport" (ASE) and Joint Stock Company “Tvel”. These companies carry
out large deals related to more significant foreign trade trends such as uranium and nuclear
fuel export, separation and conversion services, spent fuel import, NPP construction abroad,
etc. As of today, these companies possess a special external trade status granted to them
through the Decrees of Russian Federation (RF) Government – the status of authorized
entities of the RF Government in foreign trade for particular areas of atomic energy use.
Moreover, they are currently 100% state-owned. The survey and appendices enclosed provide
a systematized description of the structure/activity fields for each company, the analysis of
recent financial reports and other indicators, plans and key events over the past year, etc.

The information and analysis for each company is provided in the following format:

 1.    General data & background                 6.    Foreign partners
 2.    Company‟s structure                       7.    System
 3.    Key personalia                            8.    Financial indicators & analysis
 4.    Fields of activity & main results         9.    Plans & prospects
 5.    Quality assurance programs                10.   Key events over the past year

This survey is the first one in a series of annual analytical surveys to provide a periodical
analysis of the state-of-the-art in Minatom‟s external trade system and its authorized entities.




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                                                                                         4
CONTENT

1. Introduction…………………………………………………………………….…                                        6
2. Foreign trade activity of Minatom RF and its regulation……………………...              8
2.1. General pattern of foreign trade performance in the field of atomic energy 8
use……………………………………………………………………………………
2.2 External trade policy of Minatom RF, principles of its formation and 12
implementation………………………………………………………………………
2.3 Main trends of the Minatom RF foreign trade activity…………………….…                 16
2.4 Concept and plans of Minatom’s international scientific and foreign trade 24
activities for the period of up to 2010 and beyond………………………………..
2.5 Regulation of the activities of authorized foreign trade entities from the side 35
of Minatom…………………………………………………………………………..
3. Information about foreign trade entities of Minatom RF……………………...               37
4. Conclusion………………………………………………………………………… 38
5. List of IBR reports relevant to the theme of this Survey………………………               42
Annex A1………………………………………………………………………….…. 43
A1.1. GENERAL DATA & BACKGROUND……………………………………..                                    44
A1.2. COMPANY'S STRUCTURE………………………………………………...                                     46
A1.3. KEY PERSONALIA………………………………………………………….                                        48
A1.4. FIELDS OF ACTIVITY & MAIN RESULTS……………………………...                              49
А1.5. QUALITY ASSURANCE PROGRAMS……………………………………                                     59
A1.6. FOREIGN PARTNERS……………………………………………………… 59
A1.7. SYSTEM OF RELATIONS WITH RUSSIAN SUBCONTRACTORS…..                           60
A1.8. FINANCIAL INDICATORS & ANALYSIS………………………………..                                61
A1.9. PLANS & PROSPECTS……………………………………………………...                                     66
A1.10. KEY EVENTS OVER THE PAST YEAR………………………………… 67
Annex A2…………………………………………………………………………….                                             72
A2.1. GENERAL DATA & BACKGROUND……………………………………..                                    73
A2.2. COMPANY'S STRUCTURE………………………………………………..                                      74
A2.3. KEY PERSONALIA………………………………………………………….                                        74
A2.4. FIELDS OF ACTIVITY & MAIN RESULTS……………………………..                               74
A2.5. QUALITY ASSURANCE PROGRAMS……………………………………                                     80
A2.6. FOREIGN PARTNERS……………………………………………………… 81
A2.7. SYSTEM OF RELATIONS WITH RUSSIAN SUBCONTRACTORS…..                           82
A2.8. FINANCIAL INDICATORS & ANALYSIS……………………………….                                 86
A2.9. PLANS & PROSPECTS……………………………………………………...                                     86


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                                                                 5
A2.10. KEY EVENTS OVER THE PAST YEAR………………………………… 89
Annex A3…………………………………………………………………………….                     92
A3.1. GENERAL DATA & BACKGROUND……………………………………..            93
A3.2. COMPANY'S STRUCTURE………………………………………………...             94
A3.3. KEY PERSONALIA………………………………………………………….                97
A3.4. FIELDS OF ACTIVITY & MAIN RESULTS……………………………...      979
А3.5. QUALITY ASSURANCE PROGRAMS……………………………………. 103
A3.6. FOREIGN PARTNERS……………………………………………………… 104
A3.7. SYSTEM OF RELATIONS WITH RUSSIAN SUBCONTRACTORS…..   104
A3.8. FINANCIAL INDICATORS & ANALYSIS………………………………..        106
A3.9. PLANS & PROSPECTS……………………………………………………...             112
A3.10. KEY EVENTS OVER THE PAST YEAR………………………………… 114




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1. Introduction

Today the Ministry for Atomic Energy of Russian Federation (Minatom RF) is one of the
largest and more powerful Russian industrial systems.

Minatom RF holds the 4th place in Russia in export output (after gas, oil, and metallurgical
industries) and the 2nd place in export output for high-tech products, directly after the Russian
military complex. In 2001, the export capacity of Minatom RF was 2.5 billion US$, which is
10% higher than in the previous year, see Fig. 1. Russian nuclear export produces significant
tax allocations and, thus, contributes a lot to the RF budget. Observed is nearly linear rate of
growth over the past three years.

                     3000.00                                           2795.7

                                                            2516.6

                     2500.00                   2279.6

                                      1891.4
                     2000.00
       US$ million




                     1500.00




                     1000.00




                      500.00




                        0.00

                               1998     1999    2000            2001    2002     2003
                                                        years

Fig. 1. Minatom RF overall exports of produce, technologies, and services (planned value
is specified for 2002)


In recent years, the export of services and goods both in the CIS countries and in other foreign
countries constitutes the major proportion of the Russian nuclear industry's earnings.
Nowadays, Minatom of Russia is engaged in external economic activities with other countries
in many fields, the major ones being:
 SWU exports within HEU-LEU agreement;
 Provision of uranium conversion and enrichments services to foreign customers;
 Exports of natural uranium;
 Enriched uranium supplies for purposes of NPP fuel production;

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                                                                                               7
   Nuclear fuel exports;
   Construction of domestically-designed NPPs abroad;
   Exports and imports of non-nuclear materials and equipment;
   Exports of radioactive and stable isotopes;
   Imports of spent nuclear fuel and its reprocessing, etc.

Nowadays, many Minatom enterprises have a legal status which allows them to be involved in
external economic activities of their own (of course, in a legally established order and upon
coordination with the Minatom RF). At the same time, to carry out the external trade
operations for more important trends Minatom RF has created specialized external trade
entities for particular directions of its external economic activity:
 Joint Stock Company "Techsnabexport" (JSC “Techsnabexport”, TENEX), open type;
 Joint Stock Company "Atomstroyexport" (JSC “Atomstroyexport”, ASE), closed type;
 Joint Stock Company “Tvel” (JSC “Tvel”, TVEL), open type.

It should be noted that, different from JSC "Techsnabexport" and JSC "Atomstroyexport"
which are both namely specialized foreign trade entities (intermediaries), JSC “Tvel” is not
only one of the largest exporting entities but one of the largest Russian nuclear production
holding as well.

As of today, 100% of the stock of these three companies belong to the State, and, by special
Decrees, these companies are authorized to carry out external trade operations for particular
trends on the behalf of the RF Government. Out of the total Minatom exports in 2001 about
1.5 billion US$ (~60%) was due to the external trade operations accomplished by JSC
“Techsnabexport”, 538 million US$ (~22%) was due to JSC “Tvel” operations, and 424
million US$ (~17%) was due to the activities of JSC “Atomstroyexport”.

Though Minatom RF and its enterprises still appear as a single nuclear complex of Russia,
Russian nuclear industry nowadays has no single (consolidated) budget (different, say, from
gas industry which is monopolistically represented in Russia by Joint stock company
“Gazprom”). This means that each of Minatom enterprises (state-owned unitary enterprises
included) has its own account and balance and is formally not obliged to transfer all its profits
to the accounts of the Ministry.

Different trends of Minatom‟s activity in the internal and external markets have different
profitability. Some of them, for example, fundamental studies, are essentially non-profitable.
The mentioned above external trade entities play an important role in making these trends
viable and sustainable. As it would be shown later, the relations between Minatom RF and
JSC “Techsnabexport”, JSC “Atomstroyexport”, and JSC “Tvel” are established in such a
way so as to provide for an essential portion of the profit from more profitable export
operations (such as HEU-LEU contract, for example) to be obligatorily transferred to the
account of the Ministry (with yet another portion going directly to the RF budget). Thus, the
means that allow Minatom RF to fund several important federal programs are accumulated.

The accumulated in that was funds allow Minatom RF to create a kind of consolidated budget
(called “Consolidated fund of the industry”) and to dispose of it on its own, in particular, to
fund the non-profitable scientific research and environmental programs.

The subject of this Analytical Survey is to describe and analyze the foreign trade policy of
Minatom RF, the principles of Minatom RF relations with its specialized foreign trade

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                                                                                              8
entities, the structure and activity fields of these companies, as well as the financial and
economic records attained by them as of today. The Survey presents an analysis of the:
 Current policy of Minatom RF in external economic activity and the principles of its
    formation;
 Main trends of Minatom‟s foreign trade operations;
 Minatom‟s foreign trade prospects and strategy;
 Principles of regulation of the activities of Minatom‟s foreign trade entities from the side
    of Minatom.

For each of the three Minatom‟s foreign trade entities presented, structured, and analyzed is
the information on state-of-the-art, namely:
 General data and background;
 Company‟s structure;
 Key personalia;
 Trends of activity and basic output;
 Quality assurance planning and implementation;
 Pattern of relations with Russian subcontractors;
 Plans and prospects;
 Recent financial records;
 Some other data.

The necessity to reform management and administration structures of Russian nuclear industry
arose contemporaneously with the processes of general transfer to market economy in Russia,
as the old administration and management procedures failed to meet the requirements
imposed by rapidly changing social and economic situation in the country. Nowadays, the
industry management is aimed to draw more profit from its basic activities. The restructuring
being performed at federal level and within Minatom RF inevitable addresses the activities of
these external trade companies. Observed in recent years are the changes in principles of the
State and ministerial regulation of their activities, changes of key personalia and election
procedures, changes in the structure of stock.

It may be projected that further anticipated changes in the structure of control over Russian
nuclear industry will also produce effect on the status and operation principles of the
Minatom‟s foreign trade entities. We plan to trace these changes on an annular basis, so, what
You hold in your hands is Volume 1 of our Annual Survey in the series of the same title.


2. Foreign trade activity of Minatom RF and its regulation

2.1. General pattern of foreign trade performance in the field of atomic energy use

The pattern of Minatom RF foreign trade organization and of State control over it is shown in
Fig. 2.

Comments to Fig. 2:
(1) All activities on the use of atomic energy in Russia are performed under a strict State
control, as prescribed by the Federal Law “On Atomic Energy Use”. In addition to this, as
Russia is a member of several international agreements in the field of atomic energy use, non-
proliferation of weapons of mass destruction and delivery means, it strictly conforms with the
requirements of these agreements and treaties. Hence, all foreign trade projects in the field of

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                                                                                      9
atomic energy use may be accomplished only within the frameworks defined by the current
Russian legislation in force, and by special ordinances of the RF government that always
match the international obligations of Russia in relevant field.




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                                                                                                                                                                                           10

         Legislation of a foreign country in the field of nuclear energy use                                           RF legislation in the field of atomic energy use

    Legislation of a foreign country on external economic activity in the field of                  RF legislation on external economic activity in the field of atomic energy use
                                 nuclear energy use



           President of a foreign country                                                                                                      President of Russian Federation
                                                                        International and bilateral agreements and
    Executive authorities of a foreign country                                                                                                 Russian Federation Government
                                                                         treaties in the field of nuclear energy use

                                                                                                                                                    Decrees, Ordinances


          Principle programs of atomic energy
            development in RF, programs of                                                         statute                               Principle programs of atomic energy
                international cooperation                                                                                                  development in RF, programs of
                                                                                                                                               international cooperation


      State authorities of a foreign country that carry out State control over
           nuclear energy use and relevant external economic activity
                                                                                                                          Minatom RF                                 Other RF ministries
                                                                                                                                                                     and committees
                                                                                                                                                                     concerned:
                                                                                                                                                                      RF Ministry of
          Foreign Buyer or Seller (a                                      Export                                  External trade entities of        licenses             property
        company or an enterprise of any                                                                                Minatom RF                                        relations
               property form)                                             Import                                   TENEX, ASE, TVEL                                   MEDT
                                                                                                                                                                      MFA
                                                                                                                                                                      FAPRID
                                                                                                                                                                      MF
                                                                                                                                                                      MD
                                                                                                                 Enterprises that produce or                          FSB
                                                                                                                     consume products
                                                                                                                  Enterprises that produce or                         FSVR
                                                                                                                       consume products
                                                                                                                      Enterprises that produce or
                                                                                                                           consume products
Fig. 3. Foreign trade activity of Minatom RF and its regulation

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                                                                                              11
(2) In compliance with the statutory acts in force, through the initiation by Minatom RF and
upon coordination with the other concerned ministries and committees of RF, the RF
Government (or the president of RF) approve principle programs of Russia‟s nuclear power
development, programs of international cooperation, and sign the bilateral (or multilateral)
agreements in the field of atomic energy use. A solid foundation for any bilateral cooperation
is an intergovernmental (bilateral) agreement on peaceful nuclear energy use. If such
agreement is not available (example: Russia-U.S.A., Russia-Japan), then any cooperation
including external trade deals requires a special ordinance from the RF Government to be
adopted and a particular bilateral agreement to be signed afterwards (example: a bilateral
Russian-U.S. Agreement of February 18, 1993 providing for the HEU-LEU contracts that are
now underway).

(3) To execute bilateral (or multilateral) agreements of RF, RF Government ordinances,
Minatom RF, upon coordination with other RF ministries concerned, carries out foreign trade
activity through the authorized external trade entities, or, directly, through daughter
enterprises. Authorized foreign trade entities - JSC "Techsnabexport", JSC
"Atomstroyexport", JSC “Tvel” – are responsible for the realization of more important or big
foreign trade deals in the field of nuclear energy use, such as construction of NPPs or other
objects abroad, exports and imports of nuclear fuel, natural uranium, and uranium for fuel
production, conversion and enrichment services, exports and imports of radioisotopic
produce. The status of these entities is defined by special ordinances of the RF Government.

Less important foreign trade deals of Minatom RF which are, as a rule, related to the exports
of non-nuclear materials, equipment and technologies may be accomplished directly through
the enterprises of Minatom RF (which should have a license for the performance of such kind
of an external economic activity) or though “Rosenergoatom” Concern which currently carries
the functions of a single utility in Russia.

(4) The RF Ministry of property relations is currently a formal holder of all shares of JSC
"Techsnabexport", JSC "Atomstroyexport", and JSC “Tvel” which are nowadays 100% state-
owned.

(5) One of the more profitable (though not prevailing in the total amount of export) trends of
external economic activity – sales abroad of the electricity produced at Russian NPPs – is
accomplished by the Russian joint stock company “Unified Energy System of Russia”, i.e.,
the company not affiliated with the Minatom RF. Particular control from the side of Minatom
is provided through the participation of “Rosenergoatom” Concern, it functions include
coordination of the export activities of Russian NPPs and distribution of the currency profit
between them. As “Rosenergoatom” Concern has no status of an authorized external trade
company as assigned by the RF Government, detailed consideration of its external economic
activity is beyond the scope of the present Survey.

(6) External trade entities of Minatom RF accomplish foreign trade deals in conformity with
the Russian legislation in force that prescribes an obligatory licensing of all contracts related
to the export or import of nuclear materials, relevant commodities and technologies, and also
dual-use commodities and technologies. A single authorized executive authority responsible
for issuing of the corresponding licenses for export and import is Russian Federation Ministry
of economic development and trade (MEDT RF). The order adopted for license issuing
provides for the performance of a State expertise for any planned foreign trade deal. The list
of participants of such expertise obligatorily includes Minatom RF. If found necessary, other


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                                                                                                12
concerned RF ministries and committees are involved also, which may be: RF Ministry of
foreign affairs (MFA), Federal agency on legal protection of the results of intellectual activity
of military, special and dual application (FAPRID) under RF Ministry of justice, RF Ministry
of finances (MF), RF Ministry of defense (MD), Federal security service (FSB), Federal
service of foreign intelligence (FSVR), etc.

(7) The order of external economic activity in the field of atomic energy use in other countries
is very often similar (omit details) to the one shown in Fig. 2. At least, this is the case for all
developed countries that signed Non-Proliferation Treaty, but also for several developing
countries that make nuclear trade deals with Russia.

On the total, the system of State regulation of Minatom‟s foreign trade activities secures the
conformity to international obligations of Russia in non-proliferation of weapons of mass
destruction and delivery means, the observance of Russian state and commercial secrets, the
conformity to the principles and trends outlined in the principal programs of atomic energy
development in Russia, and compliance with the bilateral (or multilateral) agreement of
Russia on cooperation in the field of atomic energy use. At least, this is the case on an
institutional level.

The selection of joint stock companies, i.e., the companies that are not state-owned, as
authorized foreign trade entities had facilitated and continues to facilitate the efficiency of
foreign trade operations.

At the same time, if proper mechanisms of control and regulation from the side of Minatom
RF, other concerned RF ministries and committees are absent, delegation of the functions of
direct foreign trade deals accomplishment to the companies that are not state-owned may
result in financial infringements and non-purposeful allocation of profits.

The principles of Minatom RF interaction with its authorized foreign trade entities, the
principles of regulation of the activities of these entities from the side of other RF ministries,
and the currently observed tendencies in this field are presented in Section 2.5.


2.2 External trade policy of Minatom RF, principles of its formation and implementation

The formation principles of State external trade policy in the field of atomic energy use are
illustrated by Fig. 3.

Comments to Fig. 3:
(1) All kinds of activity in nuclear energy use performed in Russia or from Russia are
regulated by the RF legislation in force. The preparation of statutory acts and amendments to
them is facilitated by Minatom RF. After being coordinated with other RF ministries
concerned, these acts are submitted for consideration to the federal legislative body – State
Duma.

      After successful voting in State Duma, the act is submitted for approval to the Council
       of Federation, and, after that, it is submitted to the RF President for signing. After
       signing by the RF President, the statutory act is considered to be legally put into force.
       Basing on the statutory acts put into force, departmental regulations are developed that
       are the documents of direct implementation used for practical purposes. The initiative


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                                                                                 13
on adopting new statutory acts, as a rule, comes from more concerned RF ministries –
Minatom RF and the Federal survey of Russia on nuclear and radiation safety
(Gosatomnadzor RF). Particular amendments to the legislation and, sometimes, even
new statutory acts may be facilitated by the top management of large enterprises,
concerns, and industrial groups.




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                                                                                                                                                                     14

                              RF legislation including statutory acts and regulations in the field of atomic energy use


                          President of Russian Federation                                              State Duma
                          Russian Federation Government                                            Council of Federation


                Decrees, Ordinances                             Initiatives, proposals,
                                                                        projects                                                               MEDT
                                                                                                                             Strategy of RF economy development
                                                                                                                            Observance of the RF export control
                                                                                                                             legislation
        (1) Principle programs of RF nuclear                                                                                   Ministry of Industry, Science and
                                                                     Minatom RF                                                            Technologies
            power development
                                                           Generation of proposals for the                                 Strategy of RF industrial development,
        (2) International and bilateral
                                                            advancement of current legislation                               issues of fundamental science
            agreements in the field of nuclear
                                                           Preparation of principle programs of                                         Gosatomnadzor
            energy use
                                                            the RF nuclear power development                                Securing nuclear and radiation safety
        (3) Programs of international
                                                        




                                                                                                          Coordination
            cooperation                                     Preparation of proposals on                                                        MFA




                                                                                                           Expertise
                                                            programs of international                                       Observance and preparation of the RF
                                                            cooperation                                                      international agreements
                                                           Coordination of foreign trade                                   Issues of foreign policy in application to
                                                            contract drafts                                                  particular states
                                                                                                                                             FAPRID
                                                                                                                            Issues of rights to the intellectual property
                              Initiatives,                                                                                   and relevant obligations
                              proposals,            Minatom RF external trade                                                                   MF
                               projects                        entities                                                     Issues of State budgetary and financial
                                                    (JSC TENEX, ASE, TVEL)                 Initiatives,                      policy
                                                   Preparation of foreign trade           proposals,                                           MD
   Foreign Buyer                Contracts
     or Seller
                                                     contract drafts                        projects                        National defense issues
                                 Export            Execution of contracts                                                                      FSB
                                 Import                                                                                     Issues of national security
                                                                                                                                               FSVR
                                                                                                                            End use verification, verification of foreign
                                                                                                                             contractors
                                                                     Enterprises, companies, concerns

Fig. 3. Formation and implementation of Minatom RF foreign trade policy

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                                                                                             15
Projects of the statutory acts in the field of atomic energy use undergo an obligatory all-round
coordination in the RF ministries and committees concerned. Such procedure provides for a
better balance between the interests of the nuclear and other RF industries.

(2) Minatom RF develops the drafts of the strategy of Russian nuclear power development for
the near term and more distant future, the drafts of principal programs of nuclear industry
development, the drafts of programs of international cooperation. In shaping-up such drafts,
valuable contributions may come from particular Minatom‟s enterprises, large joint-stock
companies, and concerns. When preparing the drafts, Minatom RF takes into consideration the
industry‟s financial needs due to:
     maintenance, modernization and expansion of the production;
     preserving the industry‟s scientific and technological base;
     preserving and breeding the industry‟s scientific and technological potential.

In the conditions of market economy it is quite natural that Minatom‟s interest is always
towards an unconditional expansion of the industry, its budget increase, promotion to the new
domestic and foreign markets. All-round discussion and coordination of Minatom‟s programs
in other ministries concerned, such as Gosatomnadzor, Ministry of finance (MF), Ministry of
defense (MD), Ministry of industry, science, and technologies, etc., helps to harmonize
Minatom‟s ambitions with the interests of other branches of the RF economy. Being approved
by the RF Government, the programs become a guide to action for Minatom RF and all its
enterprises.

(3) As a rule, programs of industry‟s development include plenty of positions which may
become the items of international cooperation, foreign trade contracts included. However,
under the RF legislation in force and pursuant to the international agreements of Russia, any
external trade activity in the field of nuclear energy use may be carried out only on condition
that the requirements of international regimes of non-proliferation of weapons of mass
destruction and delivery means are observed. The basis for the observance of non-proliferation
regime in the external economic activity related to nuclear energy use is provided by a
bilateral agreement on peaceful nuclear power use. If Russia and its alleged partner do not
have such an agreement, then any particular trend of cooperation and trade would require a
special ordinance of the RF Government that should approve a certain cooperation program.
The development of such programs is strongly facilitated by the concerned enterprises of the
industry, as well as by large join-stock companies and concerns of the Minatom RF. Programs
of international cooperation may be facilitated by the alleged foreign partners of Russian
enterprises or Minatom RF (example: the HEU-LEU Agreement was facilitated by the U.S.
State Department). The proposals for such programs undergo an obligatory coordination in
Federal security service (FSB), MFA, MEDT, MF, if found necessary, in MD of Russian
Federation. The approved international cooperation programs of Minatom RF act as a legal
basis for the performance of Minatom RF external economic activity.

(4) In developing programs of international cooperation, Minatom RF makes account of the
need to:
 realize in full the already achieved export potential of the industry to provide for its
    sustainable development and funding;
 expand the market and to promote new products and services;
 solve particular tasks prescribed by the strategy of Russia‟s nuclear power development
    within the framework of international cooperation.



                                                                                   IBRTM
                                                                                              16
(5) A bilateral agreement or a certain program of international cooperation as approved by the
RF Government provide a direct foundation for the preparation, signing and execution of
export/import contracts. In compliance with the ordinances of the RF Government, the signing
and execution of such contracts for several important trends is assigned to the entities which
have a special external trade status: JSC "Techsnabexport"; JSC "Atomstroyexport"; JSC
“Tvel”. According to their status, these entities are the authorized companies to execute
export/import contracts for certain trends on the behalf of Russian Federation. For this reason
100% of these companies shares currently belong to the State (with the formal owner being
the RF Ministry of property relations). All contracts signed by these entities undergo an
obligatory preliminary coordination with the Minatom RF, other RF ministries and
committees concerned. Moreover, any foreign trade deal related to the export or import of
nuclear materials, dual-use commodities and technologies is subject to obligatory preliminary
State expertise and licensing within the framework of export control. It should be noted that
licensing of the contracts related to the import of nuclear materials, SNF included, and toxic
substances assumes the performance of an obligatory State expertise with the participation of
Russian environmental protection authorities (RF Ministry of natural resources, RF Ministry
of health protection).

As a rule, specialized foreign trade entities of Minatom RF do not play any significant role in
shaping-up the Ministry‟s external trade policy. The exception here is JSC “Tvel” which is not
only an authorized foreign trade entity, but one of the largest production companies in the
field of nuclear fuel cycle in Russia. On the other hand, being an experienced players at
foreign markets, the foreign trade entities of Minatom RF contribute a lot at the stages of
preparation and execution of actual foreign trade deals (preparation of contract drafts and
conditions, search for the subcontractors, negotiations, coordination of supplies, etc.).

Finally, a few words about one more important aspect of the Minatom policy regarding its
authorized foreign trade entities. As it was already mentioned in the introduction, Russian
nuclear complex headed by Minatom in the current time has no consolidated budget. At the
same time, the existing system of relations between Minatom and its foreign trade entities
assumes the allocation of an essential part of the profit from more profitable foreign trade
deals at the accounts of the Ministry. Thus, the profit from operations of foreign trade entities
allows Minatom RF to create a kind of consolidated budget (the program is called
“Consolidated funds of the industry”). This pseudo-consolidated budget allows Minatom to
redistribute the means to the benefit of the industry and principal federal programs.

Example:
The profit obtained in the course of HEU-LEU contract performance (JSC “Techsnabexport”)
is partially spent for the execution of federal programs of remediation of the radioactively
contaminated territories, for federal programs of the conversion of military industries, for
fundamental and applied studies, which, on the total, facilitates to origination of growth points
in Russian economy.


2.3 Main trends of the Minatom RF foreign trade activity

Main trends of the Minatom RF foreign trade activity, as structured according to the export
and import operations and the organizations through which they are accomplished are shown
in Fig. 4.



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                                                                                         17
Comments to Fig. 4:
(1) Minatom RF renders services to many foreign countries and companies (for example,
uranium enrichment services for raw materials supplied by the customers) and also sells the
enriched domestic uranium (Minatom concluded contracts with France, Korea, South Africa,
Germany, USA, Switzerland, etc.). The industry separation capacities are also used to
implement the international contract for processing of high-enrichment uranium into the low-
enrichment one (HEU - LEU Contract). The overall amount of uranium produce and services
constitutes the bulk of Minatom RF export activities (49.7%).




                                                                                IBRTM
                                                                                                                                             18
(I) EXPORT



                       Russian joint-stock company “Unified Energy System of Russia” / “Rosenergoatom” Concern
      Exports of electric power generated at Russian NPPs to CIS countries, to the Scandinavian countries, and to the East European
       countries. Russian joint-stock company “Unified Energy System of Russia” manages and executes exports and imports of electric
       power, while “Rosenergoatom” Concern coordinates export activities of Russian NPPs and distributes the profit in currency between
       them.



                                                               JSC "Techsnabexport"
      Uranium conversion services;
      Uranium enrichment services based on the customer's raw material;
      Enriched uranium supplies as UF6 for purposes of NPPs' fuel fabrication;
      Supplies of natural uranium as U3O8 and UF6;
      Supplies of enriched uranium, metal for use in scientific reactors;
      Supplies of other uranium bearing materials (uranium dioxide, enriched uranium as U3O8, depleted uranium as metal);
      60 articles of radioactive isotopes, nearly 200 articles of stable isotopes and a number of compounds in which natural elements are
       substituted by stable isotopes, including hydrogen substituted by deuterium (deuterium compounds) and heavy water;
      Charged particles accelerators for scientific, medical and industrial purposes;
      Gamma-ray installations;
      Electro-physical equipment and instruments used in the nuclear technology;
      Calcium metal in various forms;
      Zirconium and its alloys;
      Magnets on the base of strontium ferrite.




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                                                                                                                                     19



                                                       JSC “Atomstroyexport”
 Nuclear power plants with water-moderated power reactors of VVER type (analogous to Western pressurized-water reactors of PWR
  type), including construction, repair and maintenance;
 Nuclear heating plants and nuclear heat power plants;
 Nuclear research centers;
 Nuclear desalination plants;
 Wind power units;
 Other goods and services




                                                                JSC “Tvel”
   Supplies of nuclear fuel to former Soviet Union countries and to Western countries (fuel elements for VVER and PWR reactors);
   Exports of non-nuclear materials and equipment, including:
   D2O and deuterium;
   Zr, Ca, Li;
   Hardalloyed products;
   Magnets




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                                                                                                                                              20
(II) IMPORT


                                                          JSC "Techsnabexport"
       Since 29.03.2002, an authorized by the RF Government foreign trade entity for spent nuclear fuel (SNF) imports: imports of SNF from
        foreign countries;
       Uranium regenerated from spent fuel of Western PWRs;
       Modern efficient technological equipment;
       Metal working machines;
       Laboratory, analytical and medical equipment;
       Measurement instruments;
       Computers and etc.



                                                             JSC “ Atomstroyexport”
       Imports of various goods and services, details not announced



                                                                   JSC “Tvel”
       Since 29.03.2002, an authorized by the RF Government foreign trade entity for SNF imports: imports of SNF from former Soviet
        Union and other countries to which the nuclear fuel has been leased;
       Probably, some equipment items that may be in demand for the enterprises incorporated into JSC “Tvel” (details not announced)



                                                           “Rosenergoatom” Concern
       Imports of non-nuclear materials, equipment, spare parts, and services for Russian NPPs



Fig. 4. Main trends of the Minatom RF foreign trade activity and companies responsible for the execution of particular contracts



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                                                                                              21
(2) The export sales of fabricated nuclear fuel and of uranium which now constitute up to 25%
of the world sales of these types of products (in spite of the restrictive measures introduced by
some countries of the international uranium market) are one of more important sources of
money. Throughout 1998 the volume of nuclear fuel sales to the foreign countries constituted
about US$ 300 million, while that in the FSU countries - about US $70 million. The export of
uranium enrichment services for the Western customers and the fabrication of fuel pellets and
fuel rods for the European NPPs also play very important role here. Export of nuclear fuel
(fuel assemblies) is the second major source of industry‟s export income (18.7%).

(3) The Minatom RF enterprises are involved in the construction and modernization of nuclear
reactors, nuclear research facilities, charged particle accelerators, thermal electric power
plants, heat exchange units, turbines and other equipment like pipelines or chemical
production tanks. Minatom has a stable, efficient and highly developed construction and
mounting branch with 40-year experience in the construction and mounting of the most
sophisticated and unique power plants and commercial enterprises both within the FSU and in
other countries. This branch covers the complete chain, starting from plant design and up to
the "turnkey" construction and mounting of installations, plants and enterprises. This branch
incorporates 18 state enterprises and 2 Joint Stock Companies with the total number of
employees constituting 7,200 of which 5,200 are the personnel of Research Institutes and
Design Organizations. The branch institutes and organizations cooperate with many foreign
countries including: China, Poland, Egypt, Czech Republic, Yugoslavia, Cuba, Libya,
Bulgaria, Iran, etc. Minatom continues to cooperate with the old customers in the former
socialist countries and develops cooperation with new customers in other countries.
Construction of atomic energy objects abroad is the third major source of industry‟s export
income (16.5%).

(4) Traditionally, the design, construction and commissioning of NPPs and large-scale
production facilities at the territories of FSU countries form an essential part of Minatom's
international cooperation. Ukraine and Kazakhstan are the most active partners of Russia. A
draft Agreement on cooperation in nuclear fuel cycle has been elaborated and coordinated
recently with the Ukraine. Activities to complete construction and to put into operation the
Rovno and the Khmelnitsky NPPs are in progress. Russia supplies nuclear fuel to the Ukraine
and transports spent nuclear fuel back from the country. Russia cooperates with Kazakhstan in
the production of nuclear fuel and in other areas of nuclear fuel cycle. An NPP is planned to
be constructed at the territory of Kazakhstan.

(5) The Minatom Production Associations and enterprises offer a wide choice of
electrochemical production materials both for the reactor engineering and for other branches
of production including the production of consumer goods.

(6) The electric power generated by the Russian NPPs is one of the more profitable sources of
income for the industry (though not the major one as comes to the overall volume of sales,
only 3.4% in the total exports). The essential proportion of electric power is generated for
export sales in the former Soviet Union (FSU) countries, in the Scandinavian countries, in the
East European countries producing profit in foreign currency, in addition to the consumption
of the generated power in the country.

(7) Minatom enterprises carry out the contracts for the delivery of equipment, installations,
control tools, on the scientific and technical cooperation and export of technologies with



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                                                                                             22
Bulgaria, Germany, Egypt, Syria, Peru, Hungary, Poland, Vietnam, Israel, Slovakia, Ukraine,
USA, Czechia, Sweden, Spain, and also with a number of the international organizations.

(8) The comprehensive research and scientific potential of the industry enabled Minatom to
become one of the world's largest designers and manufacturers of a wide range of radioactive
material based design equipment and precision tools. The medical equipment and precision
tools developed by the listed below Institutes are known to find a ready sale. These Institutes
are: All-Russian Research Institute of Inorganic Materials (Bochvar Institute) involved in the
research of superconductivity at a commercial level; All-Russian Research Institute of
Chemical Technologies (RIChT); Institute of Physics and Power Engineering (IPPE) involved
in the design of space nuclear power installations; the Research Institute of Electrophysical
Equipment (NIIEFA); and, finally, the Minatom's largest (and one of the world's largest)
Research Institute of Nuclear Reactors (RIAR). Both research studies and products of the
mentioned Institutes find good sales at present.

(9) Minatom RF executes the procurement of materials, equipment, spare parts and services
for Russian NPPs. For example, in 2001, according to the contracts signed by
“Rosenergoatom” Concern purchased were the materials, equipment, spare parts and services
for Russian NPPs in the amount totaling 19 million US$. That very same year signed were 6
international contracts for the supplies of equipment to Russian NPPs in the amount of 4.5
million US$.

The Minatom plans for 2002 include:
 Widening range of services in the fuel market;

Comment:

Minatom‟s management sticks to a standpoint that the plan to import 20,000 metric tons of
SNF amounting to 20 billion US$ is beneficial for Russia, since this would allow to carry out
activities related to the rehabilitation of radioactively contaminated territories and to solve
other problems associated with the nuclear era heritage. SNF imports would also allow Russia
to reprocess 4 times more of its own radioactive wastes which are currently being
accumulated due to the lack of funding for the construction of new storage and reprocessing
facilities.

   Continuing construction of Nuclear power plants in China, Iran and India.

Comment:

In July of 2002 it was announced that Russia negotiates with Iran the construction of, at least,
5 new NPP units in Busher (Iran). It was also announced that feasibility study for this project
is being performed. Selected are sites for new NPPs, construction costs and terms of payment
are being evaluated. New possible locations may include Busher, Karun, or Northern Iran near
Caspian sea. The terms for construction of each of these NPPs are evaluated to be around 70
months. Project costs would depend upon the NPP location, design and unit power. An
estimated cost of each project constitutes from 1.5 to 2.2 US$ billion, which matches the
world average value.

This announcement had a shock effect on the U.S. DOE and State Department management,
and caused suspension of many planned Russian – U.S. projects. Later on, the RF Minister for


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                                                                                          23
atomic energy Mr. A.Yu. Rumyantsev apologized for this announcement, saying it was ahead
of time. However, as of the end of 2002, the complications between U.S.A. and Russia due to
the alleged Russian-Iranian large scale nuclear deal are still in place.

   Widening export of nuclear technologies and perfecting control over this process.




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                                                                                           24
2.4 Concept and plans of Minatom’s international scientific and foreign trade activities
for the period of up to 2010 and beyond

As of today, Minatom still has no approved overall strategy for its international and foreign
trade activities. The attempts to develop and approve such a document were initiated in 2000,
i.e., in the period when Prof. E.O. Adamov was still the Minister of Russian Federation for
atomic energy, but failed in decent continuation after his dismissal from this post in March
2001. Nevertheless, particular documents for the preparation of such strategy were developed
(though never made public), and their contents are outlined in brief below.


Actions provided for to increase the volume and to improve the structure of Russian exports at
world nuclear markets

To reach a success long this trend it is proposed:
 to provide better degree of coordination and concentration of the efforts of Minatom RF
   and other federal executive authorities (ministries and committees) in the performance of
   foreign trade operations;
 to provide for as soon as possible Russia‟s full membership in World Trade Organization
   (WTO);
 to provide for acceptance of Russia‟s economy market status (as of today, this goal is
   already reached).

Comment:
Russia‟s membership in WTO would strengthen the positions of Minatom RF enterprises at
those markets where they are discriminated currently. First of all, these are markets:
 of the U.S., where antidumping restrictions are being imposed currently;
 of European Community (EC), where implicit administration of quotas is currently
    observed. The administration of quotas is masked by a necessity to get an approval from
    Euroatom‟s Agency. In turn, this Agency continuously observes Russian exports not to
    exceed 20% of the total consumption of the corresponding produce in EC countries.

Of the problems restricting the expansion of Russian nuclear export cited are:
 From the side of Western countries – attempts to impose strict limitations on cooperation
    of Russia with its traditional partners in South-East Asia;
 At State level:
- unfavorable investment climate in Russia;
- absence of a clearly formulated political approach to nuclear cooperation with India and
    Iran;
- imperfections of Russian environmental protection law (as comes to SNF imports);
- absence of a mechanism for direct export sales of the electricity produced at Russian
    NPPs;
- the excessive reinforcement of Russian export control system (unilateral broadening of the
    control lists in force);
 At the departmental level – an insufficiently coordinated „vertical‟ policy in the foreign
    trade field.


Strategic trends for the expansion of Russian exports of the uranium produce, nuclear fuel,
works and services for fuel cycle back end


                                                                                  IBRTM
                                                                                              25

For the period of up to 2020, the possibilities of Russian nuclear export expansion in this field
would be defined by demands in nuclear fuel due to deployment of new NPP units. The main
tasks in this are:
 Prolongation of the available and signing of new contracts with the West-European
    companies, retaining the positions at West-European market;
 Implementation of actions targeted at the mitigation / elimination of the restrictions in
    force;
 Search for new forms of partnership with Western companies to provide for the operation
    at the markets to which Russia can not promote on its own;
 Efficient use of the possibilities provided by HEU-LEU agreement (up to 2013);
 Final resolution of fuel leasing issue.

The priority trends of cooperation with Western companies are cited to be:
 Cooperation with Siemens AG on the expansion of volumes and broadening of the
   geography of supplies of the Russian-produced fresh nuclear fuel to West-European
   countries;
 In cooperation with Framatome ANP – transfer from the production of cladding tubes to
   the production of fuel elements and assemblies for Western PWRs;
 In cooperation with GNF – successful completion of the qualification procedure by JSC
   “Tvel” (JSC “Chepetsky Mechanical Plant”) for the production of zirconium-based items;
   production of fuel assembly components for sales at the U.S., Canadian, and Japanese
   markets;
 Pursuing an active foreign trade policy with promotion to the new markets of South-East
   Asia, Near East, South America, and South Africa, with appropriate support for customer-
   countries being provided from the RF at state level, when necessary;

Over the period 2001-2010, for fresh nuclear fuel supplies it is planned:
 To retain the dominant position of Russia at MRDR markets (markets of the Russian-
   design reactors);
 To secure the presence of not less that 70-75% at markets of East Europe, Finland, and
   Asia by 2010;
 To secure a 100% presence at markets of the former Soviet Union countries (by 2010);
 To develop cooperation with Western fuel suppliers;
 To finalize the transfer to leasing supplies of nuclear fuel.

To realize these tasks, in 2001-2010 it is planned to counteract the market expansion activities
of Western companies by:
 putting forward economically more attractive proposals;
 improving production efficiency and upgrading the quality of offered produce;
 the use of financial tools (providing credit lines to customer-countries, financing of their
   research programs, tolling contracts, etc.);
 provision of preferential conditions for SNF import in cases when export option for
   Russian-made nuclear fuel is provided for;
 negotiating with Euroatom special conditions for the export to those East-European
   countries who are about to enter EC.

In 2001 –1010 it is planned to evolve fuel leasing schemes, in particular:
 to implement pay-off schemes making account of the RF state debts;


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                                                                                              26
     to produce nuclear fuel from raw materials owned by the customer (tolling) or in
      cooperation with the customer;
     to pursue a more tight binding of the Ukraine to Russian nuclear fuel supplies through the
      involvement of Ukrainian zirconium to the production of exported fuel elements and
      assemblies (in order to counteract the U.S. attempts to promote to the Ukrainian market). .

The potential customers for works and services related to SNF treatment might be:
 those countries who operate reactors built with the assistance of former Soviet union
   (Hungary, Bulgaria, Slovakia);
 the countries that operate open fuel cycle, but have problems with intermediate or long-
   term fuel storage (usually, due to the lack of sufficient territories), such as Taiwan, South
   Korea;
 countries with closed fuel cycle that have contracts for SNF reprocessing with Western
   and/or Russian companies (such as Japan);
 countries that master open fuel cycle or have plans to abandon SNF reprocessing, that
   have capacities for long-term SNF storage but that still made no final decision on SNF
   utilization (such as, probably, Germany, Switzerland, Belgium, Spain).

The scope of exported works and services in fuel cycle back end may be expanded through:
 offering an integrated package of works and services, such as contracts for SNF
   reprocessing providing for the simultaneous supplies of fresh nuclear fuel;
 offering contracts for „one-way‟ SNF imports;
 offering contracts for SNF reprocessing with a secured right of the customer to repatriate
   the reprocessing products;
 offering contracts for a long-term (~50 years) SNF storage with subsequent customer-
   selected options of repatriation or reprocessing;
 offering fuel leasing contracts.

The planned overall volume of SNF imports for 2001-2010 is given in Table 1.

Table 1. Projection for the overall SNF imports to Russia over the period of up to 2010
                                                                    tons of heavy metals
                                The amount of imported SNF
     years       2001   2002   2003   2004    2005   2006    2007   2008   2009    2010   Total
     MRDR*         -     100    100    100     100    100     100    250    150     200   1100
     countries
     Taiwan
     and South    -       -      -       -      -      -     2000   2000    3000   3000    1000
     Korea                                                                                   0
     Japan        -       -      -       -     250    250    250     250      -      -     1000
     Countries
     of           -       -      -     300     300    350    350     400    400     400    2500
     Western
     Europe
     Total        -     100     100    400    1650   1700    2700   2800    3550   3600    1660
                                                                                             0

         The anticipated total amount of currency revenues is 19,160 – 23,130 million US$
    * - MRDR – market of Russian-design reactors



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                                                                                              27
Comment to Table 1:

In the current time, SNF imports to Russia are performed only according to the agreements
signed by the government of former USSR. Minatom‟s top management actively supports
signing of the new contracts and broadening of the scale of SNF imports to Russia for
reprocessing. On this way Russia faces a growing competition from French and British
companies who intend to supply nuclear fuel to former USSR countries and to the European
countries which operate reactors built by the former USSR. France and Great Britain also
make an offer to take SNF back.

The status and prospects of the Minatom RF overall foreign trade activities in nuclear fuel
cycle field are illustrated by the data of Table 2. Minatom has very aggressive plans in this
direction, with the overall amount of exports planned to be increased by 25% in 2005 and by
4-5 times in 2010.

An important role in broadening the spectrum of works and services offered for fuel cycle
back end will be played by the transfer to a closed fuel cycle.

As of today, there is no single system of management in the field of nuclear fuel cycle in
Russia. The enterprises of different property forms often act on their own, make independent
decisions on the distribution of profits, and define their future plans and programs
independently. A single management and control over this sector of industry is being lost,
there is no integrity neither in decision making, nor in actions. And this is the case when even
today‟s capacities might provide for the increase in fresh nuclear fuel export by several times.

Thus, necessary is a restructuring of this sector of Russian nuclear industry. Else, the industry
will degrade and Russian makers would be ousted from the world markets by Western
companies.

One of the proposals here is to create a corporation that would unite all Russian nuclear fuel
cycle productions into a single technological chain with centralized direction.


Technical assistance in the construction of nuclear power objects abroad

The basic trends of activity here are:
 Construction of new NPPs;
 Technical assistance in the operation of NPPs constructed earlier.

The fact that several Western countries have abandoned an option to deploy new NPPs in the
near term facilitates the re-orientation of Russian export activities in this field towards the
countries of Asia and Africa. With account of this the documents available for Russian
nuclear export strategy give a positive evaluation of Minatom‟s policy on the construction of
new NPP units in Iran, India, and China (the policy is evaluated as long-sighted).

Comment:

The prospects of Minatom RF activities in this field are illustrated by the data of Table 3. The
predicted amount of construction services in 2001-2010 is maximum for China (2,500 US$
million), with India and Iran going next with about 1,900 US$ million over the same period.


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                                                                                           28
Note, that the predicted construction services for Kazakhstan are only slightly smaller (1,800
US$ million).


Exports of electric power

The data on exports of electric power as produced by Russian NPPs are given in Table 4.




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Table 2. Prospects for the Minatom RF foreign trade activities in the field of nuclear fuel and fuel cycle

                                                                                                                       US$ million
                    years                     2001      2002      2003      2004      2005      2006         2007   2008    2009       2010
  Natural uranium, including natural           305
  component of LEU*
  Uranium enrichment services, including       728
  the enriched component of LEU
  Fuel assemblies                              464
  Spent nuclear fuel imports                    50
  Total:                                      1547      1406      1465      1727      1943      2271         5068   5611     6744    7310

* - accounted of is only that component of the exported natural component (according to HEU-LEU agreement) which is related to further sales
of this material




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                                                                                                                              30

Table 3. Predicted volumes of export in the construction of nuclear power objects abroad
                                                                                                               US$ million
                                                               General evaluation
                                                                                                              Forecast for 2011-
  Country, object                              Period, years   of the project up to   2001-2005   2006-2010
                                                                                                                    2020
                                                                      2010
  Iran, Bushehr NPP
  Unit 1                                                               965                 827
                                                1996-2010
  Unit 2                                                               938                 667      271
  Units 3-4                                                                                                         3500
  China, Tianwan NPP
  Units 1-4                                     1997-2010             3080                 1280     1700
  Units 5-6                                                                                                         1500
  India, Kudankulum NPP
  Units 1-2                                     1999-2010             1912                 495      1417
  Units 3-4                                                                                                         2000
  Slovakia, Mohovice NPP
  Units 3-4                                     1999-2010              120                  60       60
  Cyclotron center                                                     108                  18       90
  Czechia, Dukovany NPP
  Units 1-4                                     1999-2007              400                 300      100
  Kazakhstan, Balkhash NPP
  Unit 3 with VVER-640                                                1800                 910      890
  Ukraine, construction completion for Unit     2000-2002              120                 120
  4 of Rovno NPP and Unit 2 of
  Khmelnitskaya NPP
  Other NPPs, laboratories, nuclear research    1998-2008              676                 475      201
  centers
  Total:                                                             10119                 5152     4729            7000




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                                                                                           31
Table 4. Export of the electric power produced by Russian NPPs

  years                               1999             2000               2001
  million US$                         74.3             60.5               85.0
  fraction of the        total
  industry‟s export                   3.9%             2.6%               3.4%


The electric power produced by Russian NPPs is currently exported to Belarus, Georgia, and
Finland.

Russian nuclear industry has capabilities to increase the exports of electric power up to 400
million US$/year (20-25 billion kW h/year). Projected amounts of the electric power export
by Russian NPPs are given in Table 5.

Table 5. Plans for electric power export
                                                                     million US$
  years                          2001-2005       2006-2010             2011-2020
  Former Soviet Union              375.0           375.0                   750.0
  countries
  Finland                          230.0             230.0               460.0
  Turkey                             -               235.0               470.0
  Total                            605.0             840.0              1680.0


Export of radioisotope produce

Production association “Mayak” currently produces about 50% of the total Russian
radioisotope produce. Other principal manufacturers are : RIAR (Dimitrovgrad) - ~18%, JSC
“Cyclotron” – ~9%, Electrochemical Plant - ~7%, Chlopin Institute (Sankt-Petersburg), IPPE
(Obninsk). The projection for export volume increase in given in Table 6.

Table 6. Plans for increasing the amount of Minatom’s radioisotope produce exports

  years           2001             2003       2005            2007          2009
  million
  US$             15.9             16.0       17.8            21.5          26.0


To expand the exports of Russian radioisotope produce it is recommended to:
 pursue a single foreign trade and price policy;
 to provide for a higher degree of interest in the operations of Russian makers with JSC
   “Techsnabexport”;
 to improve JSC “Techsnabexport”‟s foreign sales network.




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                                                                                              32
Structure of Russian nuclear export: current status and projections

The structure of Russian nuclear industry exports as of today, and its projections for the period
between 2001 and 2005 are given in Fig. 5 and 6. The corresponding numerical data are
presented in Table 7.

Table 7. Structure of Russian nuclear export and projections for the period 2001-2005
(% of the total amount of industry’s export revenue)

  ##    Produce name \ years                                 2001          2001-2005
  1     Uranium produce and services                            49.7         25.63
  2     Fresh nuclear fuel (fuel assemblies)                    18.7         12.98
  3     Services in transportation, SNF storage and              2.0          32.2
        reprocessing technology
  4     Technical assistance in NPP construction abroad          16.5         22.3
  5     Chemical produce                                          4.1         1.95
  6     Electricity                                               3.4         2.63
  7     Intellectual produce (science & technology)               2.5         0.69
  8     Isotope produce                                           1.5         0.78
  9     Other produce                                             1.4         0.65
  10    Machinery produce                                         0.2         0.19


Comment to Table 7:

As of today, the most profitable export trends of Minatom are (in that order) uranium produce
& services, exports of fresh nuclear fuel, and technical assistance in nuclear power objects
construction abroad. The situation is projected to change within several years to come, with
SNF import-related works and services to become No. 1, followed by uranium produce &
services, then, NPP construction abroad, and, finally, by fresh nuclear fuel exports.




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                                      Major export commodity groups (% of the total industry's export)                                                  Major export commodity groups (% of the total industry's export)

                                         1 - uranium produce and services                                                                                    1 - uranium produce and services
                                         2 - fresh nuclear fuel (fuel assemblies)                                                                            2 - fresh nuclear fuel (fuel assemblies)

                49.7                     3 - services on transportation, SNF storage & reprocessing technologies                                             3 - services on transportation, SNF storage & reprocessing technologies
      50.00                                                                                                             40.00
                                         4 - technical assistance in NP objects construction abroad                                                          4 - technical assistance in NP objects construction abroad
                                         5 - chemical produce                                                                                                5 - chemical produce
      45.00
                                         6 - electricity                                                                35.00                                6 - electricity
                                                                                                                                           32.2
                                         7 - intellectual produce (science & technology)                                                                     7 - intellectual produce (science & technology)
      40.00
                                         8 - isotope produce                                                                                                 8 - isotope produce
                                                                                                                        30.00
      35.00                              9 - other produce                                                                                                   9 - other produce
                                         10 - machinery produce
                                                                                                                                25.6
                                                                                                                                                             10 - machinery produce
                                                                                                                        25.00
      30.00
                                                                                                                                                      22.3
  %




                                                                                                                    %
      25.00                                                                                                             20.00
                       18.7
      20.00
                                  16.5                                                                                  15.00

      15.00
                                                                                                                        10.00
      10.00


       5.00                                                                                                              5.00


       0.00                                                                                                              0.00
                1      2      3   4       5          6         7      8         9      10                                         1    2      3   4     5          6           7    8        9          10



Fig. 5. Structure of Minatom RF export in FY 2001                                                                  Fig. 6. Structure of Minatom RF export (Projection for FY 2001-
                                                                                                                   2005)




                                                                                                                                                                                                                IBRTM
                                                                                                 35
2.5 Regulation of the activities of authorized foreign trade entities from the side of Minatom

In the current time, the principles of control over the activity of external trade foreign entities
from the side of Minatom RF are as follows:

(1) 100% of the stock of "Techsnabexport", "Atomstroyexport" and “Tvel” joint-stock companies
belongs to the State and is at the disposal of the RF Ministry of property relations. In 2001,
according to the decisions of general meetings of the stockholders, these companies have bought
out all shares belonging to private stockholders and handed them over to the disposal of the RF
Ministry of property relations.

Comment: these decisions of stockholders‟ meetings are apparently facilitated by a political
decision of the RF Government and RF President V.V. Putin.

(2) JSC “Techsnabexport” and JSC “Tvel” are open type joint stock companies. JSC
“Atomstroyexport” is a closed type joint stock company. In light of the recent transfer of the
ownership to the RF State such a difference may be not clear at once. However, in practice it
means that JSC “Atomstroyexport” still does not publish the detailed information on its financial
reports, board of directors personalia, etc. The actual reason for such a difference is that most of
JSC “Atomstroyexport” foreign operations (construction of NPPs in Iran, India, China included)
are still accomplished through the credits given by the RF Government (the repayment of which
from the customers is either delayed or bounded by particular additional conditions).

(3) According to the RF Government decision, the board of directors meetings and shareholders
meetings of the state-owned enterprises and the companies with shares partially or totally owned
by State shall be performed only after the plans of such meetings are agreed upon with the RF
Government.

Comment:
According to the RF law on joint-stock companies, the boards of directors in joint-stock
companies with 100% ownership by the State are approved by the RF Government. Then, the
president or director general is elected by the board of directors. At the same time, the RF
Government decision mentioned in item (3) factually results in the realization of the following
mechanism (in application to Minatom RF foreign trade entities): the boards of directors are
approved by the RF Government upon the introduction by the Minatom RF and the RF Ministry
of property relations, while the director general or president is appointed by the RF Government
upon the introduction by the Minatom RF and the RF Ministry of property relations.

(4) Table 8 presents information on the distribution of the number of votes in the newly elected
(2002) boards of directors of JSC “Techsnabexport” and JSC “Tvel”.

Comment to Table 8:

Table 1 data illustrate the contemporary principle of formation of the boards of directors of the
Minatom RF foreign trade entities. The representatives of Minatom itself have only 50% of the
votes in them, which limits the ability of Minatom to control the decisions on a monopolistic


                                                                                       IBRTM
                                                                                               36
basis. On the total, Minatom RF and the RF Ministry of property relations have 80% of the votes
(more than 2/3) which provides for nearly total State control in making most of the decisions.

Table 8. Distribution of the number of votes in newly elected boards of directors*

  Company                           JSC “Techsnabexport”                  JSC “Tvel”
  Total number of members of                 10                               10
  the board of directors                   (100%)                           (100%)
  Of them:
  Minatom RF representatives                   5                               5
                                             (50%)                           (50%)
  Representatives of the RF                    3                               3
  Ministry of property                       (30%)                           (30%)
  relations
  Representatives     of    the             1                          1
  company                                 (10%)                      (10%)
  Representatives of another                1                          1
  company (“Techsnabexport”               (10%)                      (10%)
  in “Tvel” and vice versa)
* - more detailed information is given in Sections A1.3 and A3.3 of Annexes A1 and A3
correspondingly


(5) JSC “Techsnabexport”‟s board of directors originally included First deputy minister of the
Minatom RF V.G. Vinogradov (he had been recently dismissed from this position in the
Minatom). JSC “Tvel”‟s board of directors originally included 2 First deputy ministers of the
Minatom RF – V.G. Vinogradov and M.I. Solonin. This provides (provided) for an effective
control over the companies‟ activities from the side of Minatom RF.

(6) JSC “Techsnabexport”‟s board of directors includes the Director general of JSC “Tvel” A.N.
Nyago. JSC “Tvel”‟s board of directors includes Director general of JSC “Techsnabexport” V.A.
Smirnov. This provides for better coordination between these two companies in decision making.

(7) The biography of V.A. Smirnov (born in 1957), who was elected Director general of JSC
“Techsnabexport” on 01.03.2002, evidences his belonging to the so-called “Petersburg” group of
the young compatriots of RF President V.V. Putin. For example, starting from 2002, i.e., after the
inauguration of President Putin, V.A. Smirnov became director general of the Federal state
unitary enterprise “Enterprise for the supplies of produce under Administrative department of the
President”. He continued working in this position until being elected the Director general of JSC
“Techsnabexport”.

Comment:
Thus, new nomination to the position of JSC “Techsnabexport” director general is quite in line
with the pursued in Russia policy of reinforcement of the State „vertical of power‟.

(8) In February 2002 issued was the ordinance of the RF Government about the termination of
State participation in the capital of commercial banks. In compliance with this, the boards of

                                                                                      IBRTM
                                                                                                  37
directors of JSC “Techsnabexport”, “Atomstroyexport” and “Tvel” made decisions on selling out
of the share holdings of the “Konversbank” (former bank of the industry) to other commercial
banks.

(9) Minatom RF is a key participant of State expertise which, according to the RF legislation in
force, is performed within the framework of licensing of the external economic activity related to
exports or imports of nuclear materials, dual-use commodities and technologies (export controls).
In nuclear and adjacent areas licensing is obligatory for all contracts related to exports or imports
of the materials, technologies, commodities, and services.

(10) An important factor of the new policy implemented towards Minatom‟s foreign trade entities
is represented by a noticeable increase in the degree of information provision to the public. More
and more official information on the activities of these companies and their main indicators is
being published, dedicated web-sites in the Internet have been started and are updated on a
regular basis.

Summing the above, it can be concluded that recent years are characterized by a tendency towards
the increase of State role on the control over Minatom‟s foreign trade entities. This is evidenced
by several facts, in particular, by the transfer of 100% of the companies‟ stock to the ownership
by the State (the situation was quite different even several years ago, at that time the companies
were not 100 % state-owned, and mass media often released an informal information on multiple
infringements associated with the operation of these companies, such as transfers of currency
revenues to the offshore zones, non-purposeful use of the profits, etc.), by the changes in top
management of these companies (examples: the dismissal of JSC “Techsnabexport” former
director general Revmir Freishtut and its replacement by V.A. Smirnov, recent changes in the
management of JSC “Tvel”). It should be noted that up until recently the shares of the enterprises
incorporated in main holding entities were distributed unevenly. For example, the shares of
several enterprises, in particular, JSC “Machine building plant” (“Mashinostroitelny zavod”) were
originally distributed between the employees. In the course of several years there were the
attempts to buy out these shares from the employees which were undertaken by some commercial
structures close to the top-management of these enterprises. A certain interest to the holdings of
JSC “Machine building plant” shares was displayed by Siemens AG which had already signed
several contracts with “Machine building plant” for the production of nuclear fuel for Western
PWRs. Recent changes in the structure of “Machine building plant” property and replacements in
its top management (former JSC “Machine building plant” director general V.A. Mezhuev was
dismissed and replaced by V.P. Razin) had put an end to these tendencies.

On the whole, main task of the reorganization of relations with authorized foreign trade entities as
performed by the RF Government and Minatom RF is to reinforce State control over these
entities while preserving their market principles of operation. New information about the progress
in this direction would be presented in our following annual surveys from this series.


3. Information about foreign trade entities of Minatom RF

Annexes A1-A3 present a detailed information on the Minatom‟s foreign trade entities complete
with its analysis, namely:

                                                                                        IBRTM
                                                                                                 38

   Joint Stock Company "Techsnabexport" – Annex 1;
   Joint Stock Company "Atomstroyexport" – Annex 2;
   Joint Stock Company “Tvel” – Annex 3.

The information about each of the foreign trade entities is presented in the following format:

       1. General data & background
       2. Company's structure
       3. Key personalia
       4. Fields of activity & main results
       5. Quality assurance programs
       6. Foreign partners
       7. System of relations with Russian subcontractors
       8. Financial indicators & analysis
       9. Plans & prospects
       10. Key events over the past year


4. Conclusion

The Survey presents the description and analysis of foreign trade system of the RF Ministry for
atomic energy (Minatom RF). In particular, given is a general pattern of the execution of foreign
trade in the field of atomic energy use in Russia, analyzed is Minatom‟s policy in the field of
foreign trade and principles of its formation and implementation, listed are main directions of the
Minatom RF foreign trade activity.

A more detailed consideration is performed for specialized foreign trade entities of the Minatom
RF: Joint Stock Company "Techsnabexport" (JSC “Techsnabexport”), Joint Stock Company
"Atomstroyexport" (JSC “Atomstroyexport”), and Joint Stock Company “Tvel” (JSC “Tvel”)
which execute large deals for the more important trends related to the exports of uranium, nuclear
fuel, conversion and enrichment services, spent nuclear fuel (SNF) imports, NPP construction
abroad, etc. As of today, these companies possess a special external trade status assigned to them
by special ordinances of the RF Government. They are authorized companies of the RF
Government for exports and imports in particular fields of the atomic energy use. The Survey and
Annexes to it give the analysis of the principles of Minatom RF relations with its foreign trade
entities, the structure and activities of these companies, as well as of the current financial end
economic indicators of these entities.

The consideration performed within the present Survey makes it possible to draw the following
conclusions:

(1) In the current time foreign trade activities of the Minatom RF are accomplished through
different channels. The right to conduct particular foreign trade operations is assigned to several
enterprises of the industry (both, state-owned and joint stock), and also to the “Rosenergoatom”
Concern which carries out the functions of a unified Russian utility (procurement of the
equipment, spare parts, and import of services for the needs of Russian NPPs). Sales abroad of

                                                                                       IBRTM
                                                                                                 39
the electricity produced by Russian NPPs (one of the more profitable exports of the Russian
nuclear industry) are accomplished by the entities that have no relation to the Minatom system.
The seller here is Russian joint stock company “Unified Energy System of Russia”, while the
functions of “Rosenergoatom” Concern are limited to the coordination of export activities of
Russian NPPs and to the distribution of currency profit between them. At the same time,
export/import operations for several important namely nuclear trends are accomplished through
the authorized foreign trade entities which have a status of joint stock companies (open type or
closed type).

(2) In compliance with the Federal law “On atomic energy use”, in Russia all kinds of activity
related to nuclear energy use are under a strict State control. General pattern of external trade
activity in the field of nuclear energy use includes the following basic elements:
 Strategies of atomic power development in Russia, principal programs of nuclear industry
    development, programs of international cooperation as approved by the RF Government;
 A bilateral agreement of Russia with the exporter or importer country on peaceful use of
    nuclear energy;
 If the above agreement is not available, a bilateral arrangement for cooperation in a certain
    field of nuclear energy use and a certain program of such cooperation as approved by the RF
    Government;
 A catch-all regime of export control which provides for the performance of an obligatory
    State expertise and licensing for each particular deal or group of deals (trend) in the field of
    exports or imports of nuclear materials, dual-use commodities and technologies;
 An obligatory ecological State expertise for all contracts that assume the import to Russia of
    nuclear or radioactive materials, SNF included.

(3) The policy of Minatom RF in the foreign trade field is formed by the Ministry itself on the
basis of the proposals and initiatives of the enterprises, industrial groups, concerns and companies
of the industry. It is not an exemption when particular trends of foreign trade policy are initiated
by the alleged foreign partners or governments of the exporter country (HEU-LEU contracts). The
projects of industry‟s development, programs of international cooperation are subject to an all-
round expertise and coordination with the attraction of other RF ministries and committees
concerned, among them: Federal security service (FSB), RF Ministry of foreign affairs (MFA),
RF Ministry of economic development and trade (MEDT RF), RF Ministry of finance (MF), if
necessary, RF Ministry of defense (MD). The procedure of coordination of the Minatom‟s
program drafts in multiple other ministries concerned helps to harmonize Minatom‟s ambitions
with the interests of other branches of the RF economy, State policy as a whole. After
coordination, the program draft is submitted for consideration to the RF Government, and is
being put into force by an ordinance (resolution) of the RF Government.

(4) In developing programs of international cooperation, Minatom RF makes account of the need
to:
 realize in full the already achieved export potential of the industry to provide for its
    sustainable development and funding;
 expand the market and to promote new products and services;
 solve particular tasks prescribed by the strategy of Russia‟s nuclear power development
    within the framework of international cooperation.


                                                                                       IBRTM
                                                                                                 40
The basic goal of Minatom‟s foreign trade activity is to provide for the financing of the industry
which is necessary to:
     maintain, modernize and expand the production;
     preserve the industry‟s scientific and technological base;
     preserve and breed the industry‟s scientific and technological potential.

(5) As of today, Minatom RF still has no approved overall foreign trade strategy. As of today, the
most profitable export trends of Minatom are (in that order) uranium produce & services, exports
of fresh nuclear fuel, and technical assistance in nuclear power objects construction abroad.
According to the projections available, the situation is anticipated to change within several years
to come, with SNF import-related works and services to become No. 1, followed by uranium
produce & services, then, NPP construction abroad, and, finally, by fresh nuclear fuel exports.

(6) As a rule, specialized foreign trade entities of Minatom RF do not play any significant role in
shaping-up the Ministry‟s external trade policy, defining its key propositions The exception here
is JSC “Tvel” which is not only an authorized foreign trade entity, but one of the largest
production companies in the field of nuclear fuel cycle in Russia. On the other hand, being an
experienced players at foreign markets, the foreign trade entities of Minatom RF contribute a lot
at the stages of preparation and execution of actual foreign trade deals (preparation of contract
drafts and conditions, search for the subcontractors, negotiations, coordination of supplies, etc.).

(7) Main directions of the Minatom‟s foreign trade activity executed through the specialized
foreign trade entities are as follows:

JSC “Techsnabexport” (TENEX):
    Uranium conversion services and uranium enrichment services based on the customer's
      raw material;
    Enriched uranium supplies as UF6 for purposes of NPPs' fuel fabrication, supplies of
      natural uranium as U3O8 and UF6;
    Supplies of enriched uranium, metal for use in scientific reactors, supplies of other
      uranium bearing materials (uranium dioxide, enriched uranium as U3O8, depleted uranium
      as metal);
 Supplies of radioactive and stable isotopes;
 Imports of spent nuclear fuel and regenerated uranium from foreign countries;

JSC “Atomstroyexport” (ASE):
 Exports of nuclear power plants with water-moderated power reactors of VVER type
   (analogous to Western pressurized-water reactors of PWR type), including construction,
   repair and maintenance;
 Exports of nuclear heating plants and nuclear heat power plants;
 Exports of nuclear research centers;
 Exports of nuclear desalination plants;

JSC “Tvel” (TVEL):
 Supplies of nuclear fuel to former Soviet Union countries and other countries (fuel elements
   for VVER and PWR reactors);


                                                                                       IBRTM
                                                                                                   41
   Imports of spent nuclear fuel from former Soviet Union and other countries to which the
    nuclear fuel has been leased.

As Minatom has plans to increase the volume of leasing operations in the field of nuclear fuel
export (supplies of nuclear fuel abroad with SNF repatriation to Russia for storage and
reprocessing), the role of JSC “Tvel” may become even more prominent in the future. The first
sign of it is the RF Government Ordinance of 29.03.2002 which had authorized JSC “Tvel” to
execute external trade deals related to SNF imports to Russia (like JSC “Techsnabexport”, but the
difference is that “Tvel” should import only SNF produced from fuel that had been previously
leased). Thus, a particular concentration of the authorities and their redistribution in favor of JSC
“Tvel” is observed.

At the same time, there is an unofficial information from particular top-management persons of
Russian nuclear enterprises that some high-ranked Minatom officials lobby the idea to create yet
one more specialized foreign trade entity dedicated to the exporting of Russian services in fuel
cycle back-end. Personal interest may be the driving force behind this idea.

(8) In the current time, 100% of the stock of the JSC "Techsnabexport", "Atomstroyexport" and
“Tvel” belong to the RF State (the holder is the RF Ministry of property relations). In this, JSC
“Techsnabexport” and JSC “Tvel” are open-type companies, while JSC “Atomstroyexport” is a
closed-type company. The apparent reason behind this is that most of the RF NPP construction
deals abroad are executed through the credits provided by the RF Government, with no
immediate profits or reimbursement being provided for. Being a closed type company, JSC
“Atomstroyexport” limits the amount of information about these deals (no financial or profit
indicators, etc.) being presented to the public.

According to the new RF legislation, no shareholders meeting or board of directors meeting in the
authorized foreign trade entities can be performed without the preliminary coordination of its plan
with the RF Government.

New boards of directors have been elected in the authorized foreign trade entities in 2002. The
share of the votes controlled by Minatom is now limited to 50%, while the RF Ministry of
property relations controls 30% of the votes. Thus, a total State control over the basic decisions
made at the board of directors meetings is provided. The boards of directors include at least one
First deputy minister of the RF for atomic energy.

The actual election mechanism for the top-management of specialized foreign trade entities is as
follows: the boards of directors are approved by the RF Government upon the introduction by the
Minatom RF and the RF Ministry of property relations, while the director general or president is
appointed by the RF Government upon the introduction by the Minatom RF and the RF Ministry
of property relations.

(9) Minatom RF acknowledges that its relations with the authorized foreign trade entities, as well
as its foreign trade activities as a whole are still in the process of restructuring. Main task of the
reorganization of relations with authorized foreign trade entities as performed by the RF
Government and Minatom RF is to reinforce State control over these entities while preserving


                                                                                         IBRTM
                                                                                                  42
their market principles of operation, to search for an optimum balance between State control and
market efficiency.

(10) This Analytical Survey is the first one in a series of annual analytical surveys to provide a
periodical analysis of the state-of-the-art in Minatom‟s external trade system and its authorized
entities.


5. List of IBR reports relevant to the theme of this Survey

To get a more detailed information on legal and procedural issues associated with Russian nuclear
trade we can recommend the following new reports from IBR:

Licensing in Russian Export Control: Law and Current Practices
Status of the State licensing system in control over exports of nuclear materials, dual-use
commodities and technologies in Russia
A structured and easy-to-read presentation of only those acts and procedures that were valid as of
March 2002. Description of up-to-date infringement technologies. Recommendations to foreign
customers on how to avoid and prevent offences while dealing in the Russian market.

Russian Licensing System for Fuel Assemblies Export and Irradiated Fuel Assemblies Import
A structured and detailed description of the legal procedures currently adopted in Russia. Includes
statutory acts and normative regulations, stages and steps, federal and executive authorities
concerned and their responsibilities, expertise, licensing, general order and procedures for
particular cases. A „hot‟ issue just on the eve of intensive commercial activities predicted for this
sector.

Licensing and Management of Projects on Construction / Modernization of Nuclear and
Radiation Hazardous Facilities in Russia with the Use of Foreign Investments, Technical and
Financial Aid
Contains a detailed information on the subject, covering:
 System of making decisions and projects promotion;
 Order of facilities construction;
 System of project documentation development;
 System of licensing;
 System of equipment certification;
 Project management schemes;
 Success stories.

All these new reports are available directly from the IBR web-site: www.ibrco.ru




                                                                                        IBRTM
                                                 43
Annex A1




JOINT STOCK COMPANY “TECHSNABEXPORT”, OPEN TYPE
                    (TENEX)




                                         IBRTM
                                                                                                 44
A1.1. GENERAL DATA & BACKGROUND

Requisites

Joint stock company "Techsnabexport", open type (TENEX)
Tel.: (095) 239-44-69; fax: (095) 230-26-38, (095) 953-08-20
26, Staromonetniy per., 119180, Moscow, Russia
E-mail: tenex@online.ru
Web: www.tenex.ru

History of formation

Year 1963: All-Union bureau "Techsnabexport" was founded on the basis of the All-Union
Association “Mashinoexport” of the Ministry of Foreign Trade of the USSR. Export-import
transactions related with radioactive and stable isotopes, sources of ionizing radiation, rare-earth
metals, equipment and apparatuses applying radioactive substances were transferred to
"Techsnabexport".

Year 1975: All-Union bureau "Techsnabexport" was reorganized into All-Union Association
"Techsnabexport" of the Ministry of Foreign Trade of the USSR. Export deliveries of uranium
enrichment services were also included into the range of the above types of foreign trade
activities.

Year 1988: All-Union Association "Techsnabexport" was incorporated into the structure of the
Ministry of Medium Machine Building of the USSR, later the Ministry of Atomic Energy and
Industry of the USSR, later the Ministry of Atomic Energy and Industry of the USSR and
currently the Ministry of the Russian Federation for Atomic Energy. In 1998, the Association
started export deliveries of the fuel assemblies.

Year 1990: "Techsnabexport" started export sales of natural uranium.

Year 1994: Joint-Stock Company (JSC) "Techsnabexport" became the assignee of the All-Union
Association "Techsnabexport" related to all contracts and agreements concluded previously as
well as to the rights and liabilities. Pursuant to the Russian-American Intergovernmental
Agreement, JSC “Techsnabexport” concluded the executive contract for deliveries of low-
enriched uranium (LEU) as produced from HEU derived from dismantled nuclear warheads
(HEU-LEU Contract).

Year 1999: Structural changes and innovations in the activities of the Company were performed
being targeted at the perfection of its management structure and at the search for new, mutually
beneficial and effective forms of cooperation. JSC "Techsnabexport" suggested a number of
novel products and services, enlarged the range of services provided in the field of nuclear fuel
cycle.

Year 2000: "Techsnabexport" obtained the license of Gosatomnadzor (Nuclear and Radiation
Safety Authority of Russia) for nuclear materials management that enabled the Company to


                                                                                       IBRTM
                                                                                           45
perform the activities related to nuclear materials management at all stages of production and
delivery of services and products.

Year 2001: "Techsnabexport" is transformed into the joint stock company with 100% state-owned
shares of the statutory capital.




                                                                                  IBRTM
                                                                                           46
A1.2. COMPANY'S STRUCTURE

The structure of JSC “Techsnabexport” is shown in Fig. A1.1.


                      Joint stock company “Techsnabexport”, open type


                     Tel.: (095) 239-44-69;
                     Fax: (095) 230-26-38, (095) 953-08-20

                        Department of strategic analysis and marketing
                        Department of project management
                        Department of day-to-day management
                        Legal department
                        Controlling service
                        Accounts department
                        Financial department
                        Department of business accounting
                        Department of planning and economics




      "Uranservice" Firm             "Isotopeservice" Firm            "Atomimpex" Firm

                                    promotion of the isotopic        export and promotion at
   nuclear fuel cycle products      produce manufactured by          the world market of the
          and services              Russian enterprises to the       non-nuclear products of
                                         foreign market                  the Minatom RF
                                                                            enterprises

  Tel: (095) 239-2005;            Tel: (095) 239-2570;              Tel: (095) 239-2094
  239-2614; 239-2007              239-2682
                                                                    Fax: (095) 230-2638
  Fax: (095) 230-2638             Fax: (095) 230-2638



Fig. A1.1. The structure of “Techsnabexport” (TENEX) Joint stock company




                                                                                  IBRTM
                                                                                              47
Joint stock company "Techsnabexport' has several representative offices abroad:

   GNSS, Global Nuclear Services and Supply Limited
    Established in 1991 on the territory of Switzerland. Major business activities: uranium
    products and nuclear fuel cycle services trade, mainly, in the markets of the North and South
    America.
    President - A.G. Chernov (Russia)
    3 Bethesda Metro Center
    Suite 910 Bethesda, MD 20814, USA
    Tel: (301)941-1200
    Fax: (301)941-1201

   Fuel Logistic GmbH
    Established in 1997 on the territory of the Federal Republic of Germany. Primary business
    activities: nuclear materials transportation and forwarding services. Fuel Logistic GmbH has
    agreement and partnership relations with the forwarding firms in Europe, USA, Canada,
    Singapore, Taiwan, Japan, South Korea.
    Managing director - B.A. Gvozdev (Russia)
    Bundeskanzlerplatz 2-10/14.OG.
    53113 Bonn, Germany
    Tel: 49 228 2673-123
    Fax: 49 228 2673-203

   Internexco GmbH
    Established in 1989 on the territory of the Federal Republic of Germany. Primary business
    activities: uranium ore, uranium concentrate and its compounds trade, services and other
    products of civilian nuclear industry in the Western markets.
    Managing directors: A.A. Shishkin (Russia), J. Madel (Germany)
    Frankfurter Strasse 92
    D-65760 Eschbom, Germany
    Tel: 06196 50470
    Fax: 06196 42930
    E-mail: j.madel@internexco.de

   Reviss Services Limited, England
    Established in 1992 on the territory of Cyprus. Primary business activities: isotope products
    trade in all regions of the world.
    Managing director - I. Latham (Great Britain)
    6 Chiltern Court, Asheridge
    Road Chesham, Buckinghamshire, England, HP5 2PX
    Tel 44(0) 1494 777 444
    Fax 44(0) 1494 777 457
    E-mail isotopes@reviss.co.uk


„Isotopeservice‟ Firm foreign sales network includes the following companies:


                                                                                     IBRTM
                                                                                               48
   Reviss Services (UK) Ltd. (England);
   Internexco GmbH (Germany);
   Globe Nuclear Services and Supply GNSS, Limited (Switzerland);
   Metimexco s.a.r.l. (France);
   CNL Scientific Resources, Inc., a California Corporation (USA);
   Sammit AEA Corporation (Japan);
   Chemotrade GmbH & Co. KG (Germany).


A1.3. KEY PERSONALIA

                      Joint stock company “Techsnabexport” (TENEX)

General Director: Vladimir A. Smirnov

Biographic note
Vladimir Smirnov was born in 1957 in Pskov. Graduated from the Leningrad university of
aircraft instruments. In 1986 obtained a Ph.D. for “Diagnostics theory”. In 1999 obtained a doctor
of sciences degree. V. Smirnov was one of the founders of Sankt-Petersburg stock exchange for
currency operations, was a member of the board of directors and, later, the president of
“Petersburg fuel company”. Starting from 2002, after the inauguration of President V.V. Putin, V.
Smirnov became director general of the Federal state unitary enterprise “Enterprise for the
supplies of produce under Administrative department of the President”. He continued working in
this position until being elected the Director general of JSC “Techsnabexport”.


Commercial Director: Alexei A. Grigoriev
Financial Director: Elena V. Sukhorukova
Administrative Director: Victor N. Makarenko
Personnel Director: Valery V. Bogdan

On June 18, 2002 the annual shareholders meeting of JSC “Techsnabexport” was held at which
new members of the board of directors were elected. The new board of directors included the
following personalia:

      (1) Antipenko Evald Yevgenievich – Deputy minister of the Ministry of Russian Federation
      for atomic energy (Minatom RF);

      (2) Vinogradov Vladimir Grigorievich – First deputy minister of Minatom RF (was
      dismissed from this position in Minatom in November, 2002);

      (3) Koryashkin Georgi Alekseevich – head of the department of economics and assessment
      regulation of the RF Ministry of property relations;

      (4) Kotelnikov Anatoli Aleksandrovich - Deputy minister of Minatom RF;



                                                                                      IBRTM
                                                                                              49
     (5) Lysak Olga Aleksandrovna – deputy head of the department of fuel and energy complex
     of the RF Ministry of property relations;

     (6) Medvedev Aleksandr Aleksandrovich - head of the department of normative and
     legislation assurance and regulation of property relations of Minatom RF;

     (7) Nyago Aleksandr Nikolaevich – President of JSC “Tvel”;

     (8) Ryzhov Mikhail Nikitich - head of the department of international and external
     economic cooperation of Minatom RF (was dismissed from this position in Minatom in
     October, 2002);

     (9) Tikhonov Aleksandr Vasilievich - head of the department of fuel and energy complex of
     the RF Ministry of property relations;

      (10) Smirnov Vladimir Alekseevich – Director general of JSC “Techsnabexport”


                                      “Uranservice” Firm

Director: Zalimskaya Lyudmila Mikhailovna

                                    “Isotopeservice” Firm

Director: Makarovskiy Svyatoslav Borisovich

                                      “Atomimpex” Firm

Director: Kupriyanov Igor Olegovich


A1.4. FIELDS OF ACTIVITY & MAIN RESULTS

                           Joint stock company “Techsnabexport”

“Techsnabexport”‟s strategic goals are based upon the "Strategy of the Russian atomic energy
sector development in the first half of the XXI century" as approved by the Russian government
in year 2000. The document outlines the basic directions of Russian efforts in the coming decades
and highlights foreign economic priorities.

The most important items in the range of products and services furnished by “Techsnabexport” in
the world market are as follows:
 Natural and enriched uranium;
 Uranium enrichment services and reprocessing (conversion) of triuranium octoxide into
    uranium hexaflouride;
 Recycled uranium enrichment services;
 Re-enrichment services of uranium tails;

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                                                                                                50
   Fuel deliveries for nuclear reactors;
   Irradiated nuclear fuel management services;
   Contaminated metals, metallic constructions and equipment reprocessing services;
   Services for development and design of atomic reactor components and systems;
   Radioactive and stable isotopes;
   Ionizing radiation sources, labeled and deuterated compounds;
   Calcium metal, zirconium and other metals and alloys used in the atomic power industry;
   Charged particle accelerators, gamma-radiation units;
   Special electronic and physical equipment and devices;
   Flow detectors;
   Medical radiological equipment;
   Processing, laboratory and special protective equipment and instruments for the enterprises of
    the atomic industry;
   High-enriched uranium (HEU) - Low-enriched uranium (LEU) Contract.

The HEU-LEU Contract signed under the U.S.-Russian bilateral agreement as of February 18,
1993 is effective up to 2013 and is a unique project in history that enables to transform the
originally costly process of nuclear disarmament into an economically effective one. The HEU-
LEU Contract is aimed at reprocessing of 500 MT of weapons-grade uranium, derived from
around 20 thousand warheads, into the nuclear fuel for nuclear power plants. The depletion of
HEU is carried out at the Minatom RF enterprises with natural feed (depleted uranium)
component for this process being supplied from the U.S. The resulting LEU is supplied to the
U.S. in the form of uranium hexafluoride. The U.S. side in this contract is represented by the
USEC private company domestically involved in uranium enrichment. JSC “Techsnabexport”
acts as an implementing agent from the Russian side in HEU-LEU deal. The funds obtained by
Russia in this deal are directed for financing conversion programs and restructuring the defense
productions, fundamental and applied sciences, programs for safety upgrading of the Russian
nuclear power plants and for environmental protection activities, which contributes to the creation
of growth points in overall Russian economy.

Within the framework of this agreement, the uranium for fuel of the commercial NPPs in the
amount equal to the liquidation of more than 6 thousand warheads had been supplied to the
U.S.A. so far. By 2013, the reprocessing of all 500 tons of high enrichment uranium provided for
in the agreement should be completed. The USEC representatives note the successful progress of
the deal which has an overall amount of the US$ 12 billion.

After being officially approved by the RF Government and the U.S. Government, the commercial
provisions of further realization of the HEU-LEU deal (which were coordinated earlier) were put
into force in the end of June, 2002.

Being thoroughly based on market principles, the HEU program clearly demonstrates the most
recent shift in philosophy of the U.S.-Russian bilateral relationship from “assistance to
partnership” and the joint initiative of the U.S. and Russian Presidents to pursue the business-led
policy under the motto: “Trade Instead of Aid”.




                                                                                      IBRTM
                                                                                                51
JSC “Techsnabexport” considers its role of an implementing agent in HEU-LEU deal as a high
evaluation of its activities and a high degree of confidence on the part of the Government of the
Russian Federation. For example, the revenues obtained in 2000 under the HEU-LEU Contract
accounted for about 1/5 of all non-tax revenues of the Russian federal budget and 29% of the total
currency revenues of the Russian atomic industry. In 2000, due to the Russian-American HEU-
LEU program, the atomic power industry of Russia managed to appropriate US$ 47 million for
the conversion programs. In addition to it, US$ 126 million received from the implementation of
the HEU-LEU Contract were invested into nuclear science development. Also, by applying the
funds from the HEU-LEU Contract, Minatom managed to dismantle the cores of the reactors
from 17 decommissioned nuclear submarines. Within the previous years, using the budget funds,
not more than 2-4 nuclear submarines were decommissioned annually.

Activities with the Western enrichment companies in enrichment of accumulated "tails'' of the
separation cycle of the uranium production are being carried out. Of significant importance for
JSC “Techsnabexport” was the implementation in 1999 of the first contract to render enrichment
services for the Japanese electric power utility "TEPCO".

Over the past years JSC “Techsnabexport” has been fruitfully cooperating with such biggest
world companies as "Siemens" (Germany) and "ABB" (Sweden) in perspective directions related
to the fabrication of fresh nuclear fuel at the Russian enterprises under the Western design using
customer's raw materials and components.

The Company's significant efforts are focused on the irradiated nuclear fuel market. Special
attention is devoted to the performance of the contracts on the removal of the irradiated nuclear
fuel with the traditional partners of “Techsnabexport” from Eastern Europe. The contacts with
foreign customers on several new projects are continued, including projects related to
reprocessing of the irradiated nuclear fuel from the research reactors, constructed under the
assistance of Russia (USSR) abroad. To expand the presence in the market of irradiated nuclear
fuel, “Techsnabexport” together with the production association "Mayak" and the Research
Institute for Safe Development of the Atomic Power Engineering some time ago organized the
first presentation of the Russian irradiated fuel management services in Prague (Czechia).

JSC “Techsnabexport” takes an active part in the work of the Coordinating Board of Minatom RF
related to the management of nuclear fuel from the Western nuclear power plants, amendments to
the national legislation, environmental issues, marketing and feasibility studies. Significant
information resources on different issues associated with the import of the irradiated nuclear fuel
from foreign nuclear power plants and implementation of the environmental programs are being
collected and integrated.

The positions of JSC “Techsnabexport” in the isotope market continue to strengthen, see Fig.
A1.2.

Currently “Techsnabexport” supplies over 100 items of radioactive isotopes, nearly 200 items of
stable isotopes, and dozens of types of radioactive sources, which are exported to almost all
countries of the world. The implementation of a flexible pricing policy has enabled the Company
to secure a whole range of orders from new customers as well as to significantly increase the
orders portfolio from traditional partners.

                                                                                      IBRTM
                                                                                                52

Significant efforts were made by JSC “Techsnabexport” to expand its presence in the market of
high-technology equipment, instrumentation and metals. It is specifically related to the industrial
and clinical charged particle accelerators, cyclotrons, neutron generators, irradiating gamma-ray
sources, electronic-physical equipment and instrumentation, flaw detectors, clinical radiological
equipment, technological and laboratory equipment, as well as metals and alloys used in the
atomic power industry. “Techsnabexport” is one of the world's leading suppliers of many of the
above products.

For example, in 2000 industrial accelerators were delivered to the Peoples Republic of China and
South Korea.

Under the IAEA technical assistance program, a Russian cyclotron was constructed and put into
operation in Egypt. Under the same program a gas chromatograph was delivered to Belarus. The
agreements for the annual deliveries of several accelerators for pasteurization of foodstuffs were
signed.


                 300




                 200




             %



                 100




                   0

                       1996      1997        1998           1999     2000        2001
                                                    years

Fig. A1.2. Export dynamics of isotopic products




                                                                                        IBRTM
                                                                                              53
Supplies of calcium metallic, zirconium, and goods made from zirconium, as well as from optical
glass and superconducting alloys are other basic directions. These deliveries cover around 15% of
the world market demand.

The Company proceeds to satisfy the demands of the enterprises and facilities of the Russian
atomic industry for imports of modem equipment. For example, in 2000 medical equipment
amounted to about 3.5 million US$ was supplied for the medical organizations of Minatom.

The progress in trade operations with equipment, instrumentation and materials is illustrated by
Fig. A1.3.

Foreign trade turnover of the Company in 2000 exceeded 1.58 billions US$. There are good
reasons to expect that in the near future JSC “Techsnabexport”, implementing the strategy of
Minatom RF for medium and long-term periods, will be able to expand the range of it's export
services rendered in the field of irradiated nuclear fuel management and fresh fuel lease that
would enable to provide for further upgrade of turnover indicators. Sufficient proof of the
Company's success over the past years is stable increase of the Company's revenues. JSC
“Techsnabexport” expects that this current tendency aimed at the revenues increase will retain.


                300




                200
            %




                100




                 0
                               Calcium        Accelerators        Optical
                               products                          glass

Fig. A1.3. Export increase in year 2000 as compared to 1999 for several trends


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                                                                                                54

The above is specifically connected with the transition of JSC „Techsnabexport‟, while
performing foreign trade transactions, from the status of an agent to the position of a seller of
products and services of the national atomic industry. Concurrently, the additional revenues
obtained are expected to be invested into the key programs of Minatom targeted at production
facilities upgrade and novel projects development.

The success of JSC “Techsnabexport” is illustrated by the data on overall commodity circulation
increase over the past years, as presented in Fig. A1.4.

The efficiency of JSC "Techsnabexport" is appraised by the international award "Gold Mercury",
by four prizes of the international organization "Editorial Office", including the prize "For the
best quality of the manufactured products", "To the best technological enterprise", "The best trade
mark enterprise", granted as a token of recognition of the Company's contribution to the
development of trade and international cooperation, as well as the prize for outstanding export
business achievements in the U.S. market.

The numerous awards and prizes of JSC “Techsnabexport” include the award "Torch of
Birmingham" that was awarded to the Company for the survival under severe economic
conditions. Pursuant to the final results of the foreign economic activities of the Russian
enterprises in 1997 and 1998, JSC "Techsnabexport" was awarded with the award and prize of
honor "The best Russian Exporter".



                               EXPORT                                      IMPORT
                 1600                                    160




                 1200                                    120



                                                     $
  Millions US$




                                                     S
                                                     U
                                                     s
                  800                                n   80
                                                     o
                                                     i
                                                     l
                                                     l
                                                     i
                                                     M


                  400                                    40




                   0                                       0
                        1999              2000                      1999                2000

                                  years                                        years




Fig. A1.4. “Techsnabexport”’s export and import turnover in recent years, million US$




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                                                                                                55
For the outstanding contribution to broadening Russian Federation external economic relations,
for the development of domestic production, exports and imports, and for high personal skill of
its staff members in 2002 JSC “Techsnabexport” was awarded with an Honor diploma of the Best
Russian Exporter of 2001 (Order of the RF Minister for economic development and trade No. 155
of 11.06.2002.


                                      "Uranservice" Firm

The incorporated "Isotopeservice" Firm within the structure of JSC "Techsnabexport" carries on
the following activities related to exports of the nuclear fuel cycle products and services:
 Provision of conversion services;
 Uranium enrichment services based on the customer's raw material;
 Enriched uranium supplies as UF6 for purposes of NPPs' fuel fabrication;
 Supplies of natural uranium as U3O8 and UF6;
 Supplies of enriched metal uranium for use in research reactors;
 Supplies of other uranium bearing materials (uranium dioxide, enriched uranium as U3O8,
    depleted uranium as metal).

"Uranservice" firm affords highest flexibility regarding technical specifications for nuclear
materials supplied and complies with both standard requirements and specific needs of any
nuclear fuel fabricator. The use of advanced centrifuge technology of isotope separation by
Minatom RF enterprises and high quality of rendered services enables the firm to be competitive
at the global nuclear fuel cycle market.

The “Uranservice” Firm is a principle Russian contractor for HEU-LEU contracts.

The “Uranservice” Firm carries on the repatriation of spent nuclear fuel from countries operating
Russian VVER reactors.


                                     "Isotopeservice" Firm

JSC "Techsnabexport" has successfully promoted isotopic produce manufactured by Russian
enterprises to the foreign market for already 38 years. Foreign economic activities related to the
isotopic products exports are implemented by the incorporated "Isotopeservice" firm within the
structure of JSC "Techsnabexport".

"Isotopeservice” Firm is an attractive trade partner for Russian enterprises as it possesses
significant experience and authority at the international market and is actually the sole firm in
Russia that obtains general export licenses of the Ministry of Economic Development which
allows to exercise prompt deliveries of a wide range of isotopic products.

The produce of "Isotopeservice" Firm embraces over 60 articles of radioactive isotopes,
fabricated in nuclear reactors and cyclotrons including those derived from irradiated nuclear fuel,
as well as dozens of ionizing radiation source types on the basis of these isotopes, and radio-
isotopic labeled compounds. The produce involves nearly 200 articles of stable isotopes and a

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                                                                                              56
number of compounds in which natural elements are substituted by stable isotopes, including
hydrogen substituted by deuterium (deuterium compounds) and heavy water.

A continuous growth of export volumes bears witness of the firm's stability at the global market.
At present “Isotopeservice” delivers about half of all the isotopic produce that Russia exports.

The isotopic produce of “Isotopeservice” Firm includes:

   Reactor produced radioisotopes;

   Cyclotron produced radioisotopes;

   Stable isotopes;

   Labeled compounds;

   Uranium isotopic certified reference materials;

   Radionuclide sources;

   Mossbauer sources;

   Generators;

   Radiopharmaceutical medications;

   Services on irradiation of raw materials to produce radioactive isotopes.


                                        "Atomimpex" Firm

“Atomimpex” Firm is a subsidiary of JSC “Techsnabexport” which exports and promotes at the
world market the non-nuclear products of the enterprises of Minatom RF, and also non-ferrous
metals and alloys produced by the other enterprises in Russia.

'”Atomimpex” has 38 years of experience at the world market of scientific, analytical and
technological equipment for radiation processes used in the production of cables, wires, tubes,
mechanical rubber products, coatings; in curing of the coatings, in sterilization of the food
products and medical equipment.

'”Atomimpex” assists the customers in providing a complex solution to their problems. For
example, “Atomimpex” executes the orders on the equipment of various laboratories (industrial,
petrochemical, pharmaceutical, clinical, forensic, environmental) of the research institutes,
hospitals and enterprises of the Minatom and other industries with the imported scientific and
analytical instruments of the leading world manufacturers. “Atomimpex” also imports the
complete technological equipment for the metallurgical, metal-working and other industries.


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                                                                                                 57
’Atomimpex' Firm exports:

   Charged particles accelerators for scientific, medical and industrial purposes, including:

          High Voltage Electron Accelerators;
          Cyclotrons;

   Gamma-ray installations, for example:

          Inspection complex for Customs Examination of Vehicles and large-scale Containers
           "EFASCAN";

   Electro-physical equipment and instruments used in the nuclear technology, including:

          Analytical instrumentation for mass spectrometry and gas chromatography;

   Calcium metal in various forms, for example:

          Calcium metal;

   Zirconium and its alloys used in chemical machinery construction, electro-vacuum, rocket and
    aeronautical engineering, motor-car industry, food industry, metallurgy, shipbuilding and
    nuclear industry;

   Baric ferrite and strontium ferrite magnets used in radio engineering, electrical, motor-car
    industry etc. Manufactured magnets have various forms. Segmental form magnets are used in
    electric motors. Up to date equipment of Western companies is used in magnet
    manufacturing.


’Atomimpex' Firm imports:

   Modern efficient technological equipment;

   Metal working machines;

   Laboratory, analytical and medical equipment, including:

          Mass spectrometers, gas chromatographs, FT-IR spectrometers;

          Tetrators, analytical balance tools;

          Instrumentation for thermoanalysis;

          Instrumentation for metallographic researches;



                                                                                        IBRTM
                                                   58
          Light microscopes;

          Vacuum pumps, leak detectors;

   Measurement instruments;

   Computers and etc.




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                                                                                                 59
А1.5. QUALITY ASSURANCE PROGRAMS

Early in 2002 JSC “Techsnabexport” has commenced the preparation of a new Quality
Management System for certification in conformity with the requirements of a new International
standard ISO 9001: 2000. The Company has approved a Program for preparing the Quality
System for certification. Consultative auditing is carried out by the firm TKB Intercertifica. Near-
term plans of “Techsnabexport” include certification and full implementation of this system.


A1.6. FOREIGN PARTNERS

                                      "Uranservice" Firm

"Uranservice" Firm cooperates with the following major customers:

USEC (USA)                                          SIEMENS (Germany)
NUKEM (Germany)                                     ENUSA (Spain)
COGEMA (France)                                     KEPCO (Republic of Korea)
EURODIF (France)                                    CERCA (France)
URENCO (Netherlands - Great Britain -               GKN (Germany)
  Germany)                                            EGL (Switzerland)
CAMECO (Canada)                                     KKL (Switzerland)
BNFL (Great Britain                                 Fortum Power and Heat Oy (Finland)
BEL (Great Britain)                                 etc.



                                     “Isotopeservice” Firm

Consumers of isotopic products exported by “Isotopeservice” are:

Du Pont (USA)                                       MDS Nordion (Canada)
Isotope Products Laboratories (USA)                 CEA (France)
Sanders Medical Products Inc. (USA)                 BEBIG GmbH (Germany)
Syncor Pharmaceuticals Inc. (USA)                   Japan Radioisotope Association (Japan)
North American Scientific Inc. (USA)                Radioisotope Centre "Polatom" (Poland)
Amersham plc. (England)                             Chemgas (France)




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                                                                                              60
                                      “Atomimpex” Firm

“Atomimpex‟ Firm cooperates with the following companies:

Finnigan MAT                                      ASOMA
PerkinElmer                                       FRITSCH
Hewlett-Packard                                   LEICA
Varian                                            Carl Zeiss
Therno Jerral Ash                                 NIKON
Nicolet                                           Olympus
Bruker Instrument                                 Alcatel
Mettler-Toledo                                    Balzer
LECO


The largest customers in JSC “Techsnabexport” contracts are:

USEC (USA)                                        PALMCO (USA)
URENCO (Netherlands - United Kingdom -            KEPCO (Republic of Korea)
  Germany)                                          EGL (Switzerland)
COGEMA (France)                                   KKL (Switzerland)
EURODIF (France)                                  Fortum Power and Heat (Finland)
ENUSA (Spain)                                     Teollisuuden Voima (Finland)
BEGL (United Kingdom)                             General Electric Corporation (USA)
BNFL UAM (United Kingdom)                         Vermont Yankee Nuclear Power
CAMECO (Canada)                                   Corporation (USA)
CERCA (France)                                    Wisconsin Electric Power Company
GKN (Germany)                                     (USA)
SIEMENS (Germany)                                 Westinghouse (USA)
NUKEM (Germany, USA)                              NAESCO (USA)
ESKOM (South Africa)                              ConverDyn (USA)



A1.7. SYSTEM OF RELATIONS WITH RUSSIAN SUBCONTRACTORS

JSC “Techsnabexport” performs its operations in Russia and abroad basing on the market
principles, i.e., by signing contracts with the Minatom RF, Russian and foreign partners for each
particular case.

As in the current time 100% of the company's stock is state-owned (are at the disposal of the RF
Ministry of property relations), all contracts signed by JSC “Techsnabexport” undergo a thorough
a priori coordination at the RF ministries and committees, such as Minatom RF, RF Ministry of
property relations, RF Ministry of economic development and trade, Federal security service
(FSB), RF Ministry of finance, and the more important deals – in the RF Government.


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                                                                                               61
Contracts with Russian enterprises and foreign partners fix the volumes and deadlines for the
performance of particular works, the conditions of raw materials procurement and final product
supplies, the conditions of payments, etc. In particular, the contracts with Minatom RF define the
conditions of currency profit distribution.

Example:

Fig. A1.5 presents the provided for by the contracts distribution scheme for the proceeds of the
HEU-LEU deal.

Comments to Fig. A1.5:

(1) According to the contracts signed by JSC “Techsnabexport” with its foreign partners, all
currency proceeds from the export sales of SWU and low enrichment uranium hexafluoride is
initially assigned to the accounts of the RF federal budget;

(2) The RF federal budget executes currency payments for the transportation to Russia (from the
U.S.A.) of the non-sold HEU natural component;

(3) The remaining proceeds in their ruble equivalent are assigned to the accounts of Minatom RF
and used:
 to pay off the works and services provided by the enterprises (according to the contracts
    signed between these enterprises and Minatom RF and JSC “Techsnabexport”);
 to finance scientific research programs in the field of nuclear power;
 to finance Minatom's environmental remediation and conversion programs

(4) The relations between Minatom RF and the RF federal budget are regulated by the statutory
act on federal budget for the current year. This act is approved by the RF Government and the RF
President after being approved by the RF State Duma and Federation Council. Minatom RF is
directly involved in working out the project of the RF federal budget for each next year.


A1.8. FINANCIAL INDICATORS & ANALYSIS

On June 18, 2002 conducted was an annual shareholders meeting of JSC “Techsnabexport”. The
company‟s production and financial activities over the past year were summarized, annual and
financial reports were approved, including profit and loss account, also approved were the
amount, the terms , and the form of dividend payment for year 2001, elected were new members
of the board of directors and members of the auditing commission of the company, appointed was
the auditor of the company for FY 2002, approved were the new revision of company‟s charter
which is now in full conformity with the Federal law No. 120-FZ of 07.08.2001 “On the
introduction of amendments to the Federal law “On joint stock companies”, statutory documents
on the board of directors, on auditing commission, and on director general of the company in new
revisions. “BDO Rufaudit” company was appointed the auditor of JSC “Techsnabexport” for FY
2002.



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                                                                                                      62


                                                     $ Payments for SWU
            Joint stock company
             “Techsnabexport”
                  (TENEX)                              $ Payments for UF6



                      $$




            Federal budget of RF                  $ Payments for transportation of HEU
                                                  feed from the U.S.




                  Rubles




                                           Financing of Russian scientific programs, rubles
                Minatom RF
                                            Financing of Russian ecological and
                                            conversion programs, rubles



                    Rubles




          Minatom RF enterprises
         involved in HEU-LEU deal

          Mayak, Tomsk, Krasnoyarsk,
           Yekaterinburg, Angarsk Plants
          LEU transportation within
           Russian territory



Fig. A1.5. Adopted scheme of the proceeds distribution in HEU-LEU deal.




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                                                                                       63
JSC “Techsnabexport” financial report for FY 2001

JSC "Techsnabexport" balance sheet statement as of the year 2001

                                                                      Thousands of US$
  ASSETS                                         Sheet code    Period        Period
                                                              beginning      ending
  I. Non-current assets
  Goodwill (04, 05)                               110             51            18
  Fixed assets (01, 02, 03)                       120            920          2 187
  Unfinished construction (07, 08, 61)            130           1 012         3 150
  Long-term investments (06, 82)                  140          14 604         8 723
  TOTAL for Section I                             190          16 587        14 078
  II. Current assets
  Inventories (stocks)                            210           6 008         11 601
  VAT on purchased valuables (19)                 220            744          20 135
  Debtors receivables (payments expected to       240          132 254       246 928
  be effected within 12 months after reporting
  date)
  Short-term investments (56, 58, 82)             250            245           2 270
  Cash assets                                     260           5 845         26 628
  TOTAL for Section II                            290          145 095       307 561
  BALANCE (aggregate of lines 190 + 290)          300          161 682       321 640
  LIABILITIES                                  Sheet code      Period        Period
                                                              beginning      ending
  III. Capital and reserve funds
  Statutory capital (85)                            410           3             3
  Supplementary capital (87)                        420          678           674
  Reserve capital (86)                              430          0,4           0,4
  Retained earnings from previous year (88)         460         5 032         1 665
  Retained earnings of the reporting year (88)      470                      26 796
  TOTAL for Section III                             490         5 713        29 138
  IV. Short-term liabilities
  Bank loans (90, 94)                               610         28 629        11 573
  Credit receivables                                620        127 324       280 915
  Deferred income (83)                              640           16            13
  TOTAL for Section IV                              690        155 969       292 501
  BALANCE (aggregate of lines 490 + 690)            700        161 682       321 640




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                                                                                             64

JSC "Techsnabexport" profit and loss account as of the year 2001

                                                                          Thousands of US$
  Description                                Sheet code   Reporting period Corresponding
                                                                            period of the
                                                                            previous year
  Services, operations, products sales          010           243 478            26 930
  proceeds (net) (let VAT, excise taxes
  and similar compulsory payments)
  Cost of services, operations, products,       020           180 571          124 156
  good sold
  Gross profit                                  029           62 907            14 516
  Commercial expenditures                       030             454               257
  General        and        administration      040            7 178             9 433
  expenditures
  Sales profit (losses) (lines 010-020-         050           55 276            4 825
  030-040)
  Interest received                             060              85               94
  Interest payable                              070            1 502            1 073
  Other organizations                           080            2 183            1 325
  Other operating profit                        090             185              218
  Other operating expenditures                  100            1 122            1 040
  Other profit (not connected with sales)       120            1 149              85
  Other expenditures (not connected             130            3 644             552
  with sales)
  Profit (losses) pretax (lines 050+060-        140           52 610            3 882
  070+080+090-100+120-130)
  Income tax and other corresponding            150           16 921            1 249
  compulsory payments
  Routine activities profit (loss) (lines       160           35 689            2 633
  140-150)
  Net     profit    (reporting     period       190           35 689            2 633
  retained profit (loss) (lines 160+170-
  180)

The financial report for FY 2001 was signed by:
Deputy director general                                                       Sukhorukova
E.V.
Chief accountant                                                              Lovtsev A.V.


Information about the auditor of JSC “Techsnabexport”:

JSC Audit company “BDO Rufaudit”, closed type, license No. 009050 (general audit), issued for
3 years in virtue of the order of the RF Ministry of finance No. 311 of 21.11.1999.


                                                                                 IBRTM
                                                                                                65
Auditor's Report to the members of JSC "Techsnabexport" on the financial statements for the year
of 2001

1. We, specialists of the closed type joint stock company Audit company “BDO Rufaudit”
(hereinafter – the Company), have performed an audit of the enclosed accounting report of open
type Joint stock company “Techsnabexport” (hereinafter – the Organization) for FY 2001, which
included the following forms:
       - Balance sheet (form No. 1) as of January 1, 2002;
       - Profit and loss account (form No. 2) as of year 2001;
       - Account of capital changes (form No. 3);
       - Account of cash development (form No. 4);
       - Appendix to the balance sheet (form No. 5).

2. The present accounting is prepared by the executive body of the Organization basing upon the
provisions of Federal law No. 129-FZ of 21.11.1996 “On accounting” and of the normative acts
issued pursuant to it.

3. The responsibility for preparation of the present accounting is shouldered by the executive
body of the Organization. Our responsibility is to express our opinion on the reliability of all
aspects of the present accounting as based on the results of the audit performed.
We have carried out the audit in compliance with the requirements of the RF Federal law No.
119-FZ of 07.08.2001 “On audit activities” and the audit standards of the Company which are
based on the International audit standards.

4. The audit was planned and carried out in such a manner as to gain a sufficient confidence in
that the accounting report contains no significant falsifications.

5. The audit included verification of the numerical data as performed on a random basis, and
verification of the comments present in the accounting report. We believe that the verification
performed provides a sufficient basis for the expression of our opinion on reliability of the
present accounting.

6. We have made no observations of the commodity-money resources stock-taking as of
31.12.2001. The governing body of the Organization is responsible for the reliability of the data
of stock-taking lists, comparative registers, adjustment acts.

7. In our opinion, and with account of the comments we received from the executive body of the
Organization, the enclosed with this Conclusion and specified in paragraph 1 accounting report is
reliable, i.e., prepared in such a way as to provide the image of current and non-current assets of
the Organization as of 31.12.2001 in all possible aspects, and the image of financial outcome of
the Organization activity in 2001 as based on the requirements of the RF Federal law No. 129-FZ
of 21.11.1996 “On accounting” and the normative acts issued pursuant to it.




                                                                                      IBRTM
                                                                                                66
Analysis of financial indicators:

On the whole, FY 2001 was characterized by a tremendous improvement of the financial and
economic indicators of JSC “Techsnabexport” activity. Against FY 2000, the overall product
sales, operations and services had increased by more than 800% (!). The profits had increased by
more than 1200% (!).

Comment:

The abnormally high growth rates of JSC “Techsnabexport” proceeds and profits in FY 2001
against FY 2000 can not be explained by any factors other than partial concealment of the
company‟s real revenues in previous years. Apparently, the transfer of 100% of the company‟s
stock to the control of the State, as accomplished on July 27, 2001, had contributed a lot to the
introduction of duly order to the financial reports of JSC “Techsnabexport”, and to improving the
rate of tax payments due to its proceeds.


A1.9. PLANS & PROSPECTS

Near-term plans and prospects of JSC “Techsnabexport” include :

   Continuing the execution of a next HEU-LEU contract phase;

   Further increase of the volume of trade operations in all trends of the company's activity, in
    particular, as comes to the import of equipment and items designated for the domestic needs;

   Certification and implementation of new Quality Management System based on the
    International standard ISO 9001:2000.

Long-term plans of the company include:

   Broadening the market of services in fuel cycle back-end by attracting new foreign partners,
    in particular, Czech Republic and Japan;

   Participation in preparation of the necessary legislation amendments and deployment of trade
    operations in the field of foreign NPP's irradiated nuclear fuel management. The government
    of the Russian Federation decreed by the ordinance dated March 29, 2002 and signed by Mr.
    Kasyanov, Prime Minister, to appoint JSC “Techsnabexport” to act as the organization
    entitled to conclude foreign trade transactions related to import of irradiated fuel assemblies
    of foreign nuclear reactors to the Russian Federation for technological storage and
    reprocessing;

   Increase of the volume of fabrication of fresh nuclear fuel at the Russian utility companies
    under the Western design using customer's raw materials and components;

   In addition to the existing HEU-LEU agreement, an option is pursued when the supplies of
    low enriched uranium to other countries are increased by means of fuel lease, whereby actual

                                                                                      IBRTM
                                                                                                67
    fuel as produced from HEU rather than uranium hexafluoride would be shipped from Russia
    to foreign nuclear power plants on condition that spent fuel would be returned.


A1.10. KEY EVENTS OVER THE PAST YEAR

Listed below are the key events associated JSC “Techsnabexport” (over the past year-and-a-half,
in a reverse chronological order). Particular comments are provided when appropriate.

   06.11. 2002
    Early November 2002, the General licenses of the JSC "Techsnabexport" for export of the
    following radioisotope products in 2002-2003 were prolonged by the RF Ministry of
    economic development and trade:
     "Artificial radioactive isotopes, code TN VED 2844402000, license of the Ministry of
        Economic Development and Trade of Russia # 008205509206;
     "Compounds of artificial radioactive isotopes, code TN VED 2844403000, license of the
        Ministry of Economic Development and Trade of Russia # 008205509207;
     "Other radioactive substances, isotopes and compounds, code TN VED 2844409000,
        license of the Ministry of Economic Development and Trade of Russia # 008205509208.
    New licenses will enable to continue the activities to form the orders for isotope products for
    the enterprises of the Minatom RF.

   19.09.2002
    JSC "Techsnabexport" plans to open its representation in South Korea. According to the
    information by "Techsnabexport" press service, the decision was made at the recent meeting
    between Dr. Vladimir A. Smirnov, General Director of JSC “Techsnabexport” and H.E. Tae-
    ik Chung, Ambassador of South Korea in Russia.

    Comment:
    JSC "Techsnabexport” is one of the world's leading suppliers of fuel components and
    enrichment services to nuclear power plants. The share of "Techsnabexport” deliveries to
    South Korean nuclear power plants exceeds 30% of the company's total deliveries.

   18.09.2002
    The Press Digest of 12 September carried an article from NucNet No.80 entitled "Russia: a
    nuclear corporation will be created". The full text of the article contained erroneous
    information on forthcoming restructuring in Minatom RF. Particularly it mentioned an alleged
    merger of JSC "Techsnabexport" and JSC "Tvel". The information did not correspond to
    reality. The editorial board of the Press Digest expressed apologizes to the readers.

   01.07.2002
     For the outstanding contribution to broadening Russian Federation external economic
     relations, for the development of domestic production, exports and imports, and for high
     personal skill of its staff members in 2002 JSC “Techsnabexport” was awarded with an
     Honor diploma of the Best Russian Exporter of 2001 (Order of the RF Minister for economic
     development and trade No. 155 of 11.06.2002.


                                                                                      IBRTM
                                                                                                  68
   16.04.2002
    JSC "Techsnabexport" has obtained export licenses for the period from 2002 to 2004 in
    accordance with the governmental decree No. 315-p dated 11.03.2002. These licenses permit
    the export of the following isotope products: Gd-148, Po-208, Po-209, Po-210, Ra-223, Ac-
    225, Th-228, Cm-240, Cm-242, Cm-243, Cm-244, Cf-248, Cg-250, Cf-252, Es-252, Es-253,
    Es-254, Es-255, Fm-257, Md-258, Deuterium, Tritium, He-3, compounds and wares
    containing these isotopes.

    Comment:
    These licenses are "General" that permits the immediate shipment of isotope products in
    contrast to "one-time licenses" which are obtained by other Russian exporters in two or three
    months for the purpose of every shipment execution.
    JSC "Techsnabexport" is the only Russian exporter supplying these products under General
    licenses.

   29.03.2002
    The government of the Russian Federation decreed by the ordinance dated March 29, 2002
    and signed by Mr. Kasyanov, Prime Minister, to appoint JSC "Techsnabexport" to act as the
    organization entitled to conclude foreign trade transactions related to import of irradiated fuel
    assemblies of nuclear reactors to the Russian Federation for technological storage and
    reprocessing.

    Comment:
    The ordinance states: "pursuant to Clause 2 of Article 5 of the Federal Law "On special
    environmental programs for rehabilitation of radioactively contaminated territories" to
    appoint Foreign Economic Joint Stock Company (open type) "Techsnabexport" and Joint
    Stock Company (open type) "Tvel" (with respect to the fuel assemblies delivered by the said
    joint stock company) to act as the organizations entitled to conclude foreign trade transactions
    related to import of irradiated fuel assemblies of nuclear reactors to the Russian Federation for
    technological storage and reprocessing”.

   01.08.2001
    In February 2002, the JSC “Techsnabexport” commenced the preparation of a Quality
    Management System for certification in conformity with the requirements of a new
    International standard ISO 9001:2000.


    Comment:
    The Company has approved a Program for preparing the Quality System for certification.
    Consultative auditing is carried out by the firm TKB Intercertifica.

   27.06.2001
    July 27, 2001 the JSC "Techsnabexport" annual shareholders' meeting took place.

    Comment:
    Main outcome of the meeting:


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                                                                                                 69
       A decision was taken on consolidation of shares that will shortly entail redemption of
        fractional shares. After this 100% of the Company's issued shares will belong to the State
       New Board of Directors has been effected
       Approved were the amendments and supplements to the Articles of Association, based on
        which the Company will carry out production and reprocessing of nuclear and other
        materials
       A decision was taken to pay dividends for the year of 2000 in the amount of 313,06 rubles
        per share. The total amount of dividends accounts for 30 million rubles.

   21.06.2001
    JSC "Techsnabexport" has joined the international association World Nuclear Fuel Market
    (WNFM) to become its 84th member.

    Comment:
    The WNFM association was established in 1974 and unites the companies and organizations
    from numerous countries in the world involved in nuclear energy and production of goods and
    services of the nuclear fuel cycle. Among its main objectives are assistance to international
    trade in nuclear materials used for peaceful purposes, offering a possibility for the members to
    exchange opinions on vital issues of nuclear energy and uranium market development. The
    WNFM Internet address is www.wnfm.com <http://www.wnfm.com>.

   21.02.2001
    February 21, 2002 JSC "Techsnabexport" and USEC Inc., the executive agent of the U.S.
    government, signed the amendment to the HEU-LEU Contract determining the terms on
    deliveries of the low-enriched uranium recovered from high-enriched uranium to the U.S.A.
    in 2002-2012.

    Comment:
    Hence, in the nearest time deliveries of LEU to the U.S.A. will continue under the time
    frames agreed by the Parties. The above amendment to the Contract shall be approved by the
    governmental authorities of Russia and U.S. and shall be ultimately effective.


                                        Additional details

During the annual meeting of the JSC "Techsnabexport" shareholders a logical, anticipated but at
the same time sensational decision was made: a monopolistic foreign trade company active in the
field of nuclear material business would become entirely state-owned. Presented below is the full
text of the interview given by Mr. Valery V. Bogdan, Deputy General director of JSC
"Techsnabexport” to the newspaper "Vek" (upon the request of the latter).

Q: Valery Vladimirovitch, what lies behind the decision of the annual meeting? Is it just a
formality or something more tangible?
A: Of course it is something more substantial. The failure, which occurred with the unfounded
privatization, entailed a half-private status for our entity that operated state-owned assets
(uranium and all nuclear materials are state-owned according to the law). 51% of the stake


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                                                                                                  70
belonged to the state while 49% - to private persons that were employees of enterprises under
Minatom and "Techsnabexport" itself.

Q: Were these 49% stakeholders any stumbling block for your operation?
A: If the state owns 51% of the stake it appears complicated enough to retard the activities.
Simple majority resolves most issues. Only fundamental issues as amendments to Articles of
Association, dissolution, restructuring are resolved by a 75% majority. Due to the fact that over
hundred of owners are TENEX employees, who are interested in the entity's adequate operation, it
has never caused any problem.

Q: Why changing the structure of ownership, then?
A: Now that volumes of our operation have enhanced, moral and legal issues have become
present-day since we are holders of accounts that contain cash belonging to the state. Besides this
is also a matter of relationship with state unitary enterprises as our reprocessing plants actually
are. It is easier to deal with them when your entity is state-owned and pursues state policy since it
is a specific market and a specific branch. The state will never "ease curbs" for the nuclear
industry. Besides there are obligations associated with international agreements. TENEX is an
executive agent of the Russian government for implementation of HEU-LEU agreement (a
contract that provides for down-blending of weapons-grade uranium to nuclear fuel). Therefore it
was determined under the annual shareholder's meeting that Techsnabexport now was to become
a 100% state-owned joint stock company.

Q: Wouldn't there be any violations of the owners' rights? Or was there unanimity on the part of
all private shareholders voting for this decision?
A: There was no unanimity. We have made respective amendments in the Articles of Association,
which was supported by over 90% of the shareholders. The legislation on joint stock companies
prescribes at least a 75% support.

Q: What is the pattern of the shares' transfer to the state?
A: In a course of three months till October we will buy out these shares. The law stipulates it. A
correct market-based share price is determined. These shares will be then consolidated and
transferred to the state.

Q: Is there any market-based price for the shares? Did they really have any stock exchange
quotation?
A: No, the price was based on the assessment made by an external organization. Of course, we
have never placed our stock on the market. The branch is by virtue unusual. Nobody is going to
admit any foreign owners here. Although there has always been plenty of those willing to lay
hands on the nuclear industry's assets, cash flow and the overall activities. There has been made
ceaseless attempts to do it since 1994. This is also a serious reason for the alterations made - to
maintain public control over the key industry.

Q: Will Tenex become a state unitary enterprise then?
A: No. The structural and legal basis of the entity will not be changed. We will plainly cede the
49% stock to the state under the existing legislation.

Q: And what actual changes in the operation will such a stock rearrangement entail?

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                                                                                               71
A: None on the international fuel cycle market. We will as earlier export instruments, equipment
and accelerators. We export materials used in nuclear engineering, nuclear technology in general
and isotopes. We have been active on the market for over 38 years. Techsnabexport enjoys a good
name and reputation worldwide. Therefore our foreign partners believe that it is no wrong with
us. But on the domestic market changes in our activities are under way. In the past we worked
just on a "commission" basis, that is the commission charges were retained while the remainder
funds were distributed among enterprises for their efforts and the state by remittance to the
treasury. But the industry should further develop. The funds should be accumulated and
earmarked to fundamental science, weapons development; research in nuclear engineering that
our business depends upon. Minatom, which controls us, has also command over accumulated
funds. This was also the case earlier: Minatom gave us instructions how and what funds should
have been distributed. We didn't have control over the funds. We have actually been the
Ministry's trading house. But last year we obtained a license from the State Committee for
Nuclear and Radiation Safety that entitled us to become an operational entity. So we will not just
be a commissioner, but also a buyer of nuclear materials. We send natural uranium for
reprocessing under the contract with a foreign company and pay cash to both the uranium mining
enterprise and to the reprocessing and enrichment plants. We have concluded respective
agreements and the enterprises perform our orders. So we export the finished product.

Q: Is it a sort of a "nuclear tolling"?
A: By no means. The current scheme has nothing to do with tolling. This is an ordinary
technological chain: a state enterprise directs raw material for reprocessing to plants also
belonging to the state. Under tolling only reprocessing expenses are repaid. In our case the
enterprise retains a considerable earning for its further economic and social development.




                                                                                      IBRTM
                                               72
Annex A2




JOINT STOCK COMPANY “ATOMSTROYEXPORT”, CLOSED
                     TYPE
                     (ASE)




                                       IBRTM
                                                                                                73
A2.1. GENERAL DATA & BACKGROUND

Requisites

Joint stock company “Atomstroyexport”, closed type (ASE)
35, Bldg. 3, Malaya Ordynka, 113184, Moscow, Russia
Contact Phone: 737-9037
E-mail: info@atomstroyexport.ru
Web: www.atomex.ru

Formation history

For more than 45 years Russia (and before 1992 - USSR) has been rendering the wide-range
technical assistance to other countries in development of their own scientific and technical
potential in the field of peaceful use of atomic energy. This work was started in 1955, when the
former USSR entered into the first agreements with a number of countries. These agreements
were aimed at rendering the scientific and technical assistance in creation of the nuclear research
centers. In 1956 the agreements were signed on technical assistance in construction of the first
pilot nuclear power plants in Czechoslovakia and GDR (East Germany).

In line with the extensive development of cooperation with foreign countries in the field of
peaceful use of atomic energy, in 1973 the two associations were established, namely: a
specialized foreign trade export-import association "Atomenergoexport" and an industrial
association "Soyuzglavzagranatomenergo" (later on known as "Zarubezhatomenergostroy").

Implementation of the Intergovernmental Agreements on providing technical assistance to East
European countries and Finland in development of nuclear power engineering formed the basis
for "Atomenergoexport" and "Zarubezhatomenergostroy" activities in the 1970s and 1980s.
During these years, about 30 nuclear power units and 10 nuclear research centers were
constructed abroad with the technical assistance of these associations. Besides, equipment
purchased abroad under "Atomenergoexport" import contracts has been successfully operated at
all nuclear power plants constructed in Russia.

By consent of the Ministry of Russian Federation on Atomic Energy (Minatom) Management, in
1998 the two associations merged into one company, Joint Stock Company “Atomstroyexport”,
closed type (ASE), which is a legal successor of "Atomenergoexport" and
"Zarubezhatomenergostroy" for all signed agreements, contracts and deals.

JSC “Atomstroyexport” is a self-supporting and legally independent agency within Minatom RF.
The Company is in fact a leading export-import company in this engineering branch, which has to
provide for organization, coordination and fulfillment of obligations under the existing
Intergovernmental Agreements and appropriate contracts signed to render services to the foreign
customers in constructing and commissioning the nuclear power projects abroad, including the
operation guarantee period as well as maintenance and repairs after the guarantee period has
expired.




                                                                                      IBRTM
                                                                                              74
Besides, JSC “Atomstroyexport” has been instructed by Minatom to act as a general supplier of
equipment, materials and/or as a general contractor for construction of nuclear power plants and
other nuclear projects abroad, where the Russian organizations are involved.


A2.2. COMPANY'S STRUCTURE

The structure of JSC “Atomstroyexport” is presented in Fig. A2.1.

100% of the stock of JSC “Atomstroyexport”, closed type, currently belongs to the State (and is
at the disposal of the RF Ministry of property relations).


A2.3. KEY PERSONALIA

General director JSC "Atomstroyexport" (ASE): Kozlov Victor Vasilievich

First deputy general director: Nechaev Aleksandr Konstantinovich
 Phone: 7(095) 927-54-00, 923-6406


Deputy general director: Postovalov Aleksandr Sergeevich
 Phone: 7(095) 927-5424


Deputy general director: Kumani Georgi Olegovich
 Phone: 7(095) 927-5441


A2.4. FIELDS OF ACTIVITY & MAIN RESULTS

The export program of JSC “Atomstroyexport” includes:
 nuclear power plants with water-moderated power reactors of VVER type (analogous to
   Western pressurized-water reactors of PWR type);
 nuclear heating plants and nuclear heat power plants;
 nuclear research centers;
 individual research laboratories incorporating test reactors, neutron generator, cyclotrons,
   linear accelerators;
 nuclear desalination plants;
 wind power units.

Along with implementation of its basic export program, other types of activities specified in its
Articles of Association, including export and import of various goods and services, constitute a
substantial share of the Company business.

JSC “Atomstroyexport” guarantees a wide range of services for construction of nuclear power
and research projects, including:

                                                                                     IBRTM
                                                                                              75



                    Joint stock company “Atomstroyexport”, closed type
                                      (Head office)

             35, Bldg. 3, Malaya Ordynka, 113184, Moscow, Russia
             Contact Phone: 737-9037
             E-mail: info@atomstroyexport.ru

                JSC "Atomstroyexport" Management;
                Secretariat;
                Department for finance & economy;
                Commercial-budget department;
                Accounting department;
                Legal department;
                Translation bureau;
                Division for import & barter trade;
                Division for cooperation with countries of Eastern Europe;
                Division for administrative support of foreign economic activities




Joint stock company “Atomstroyexport”           Joint stock company “Atomstroyexport”
               (Office 1)                                      (Office 2)

4, Bldg. 5, Letnikovskaya ul., 113114,          5, Bldg. 4, Potapovsky per. , 101000,
Moscow, Russia                                  Moscow, Russia
Contact Phone: 933-1021                         Contact Phone: 927 - 5400
E-mail: info@atomstroyexport.ru                 E-mail: info@atomstroyexport.ru

   Division for NPP construction in Iran;         Division for NPP construction in
   Division for cooperation with CIS               China;
    countries, Cuba, Libya, Syria;                 Division for NPP construction in India;
   Division for personnel management and          Standardization & quality management
    representations abroad;                         division;
   Office-keeping division;                       Technical division;
   Department for special metal and raw           Department for equipment
    material supply                                 transportation



    Fig. A2.1. Structure of Joint stock company “Atomstroyexport” (ASE)




                                                                                      IBRTM
                                                                                                        76
    siting survey;
    design and engineering services for projects;
    manufacturing and supply of equipment;
    construction, erection, pre-commissioning and commissioning activities;
    supply of nuclear fuel (first core and reloads);
    supply of spare parts and maintenance services;
    NPP operation;
    upgrading and modernization of existing projects;
    NPP decommissioning;
    sending of specialists to take part in construction and in pre-commissioning in-situ;
    training of local personnel in Russia and at a customer's country.

Besides, JSC “Atomstroyexport” undertakes maintenance services for the projects built abroad,
supplies spare parts, and performs other activities related to design, construction and operation of
nuclear power plants.

The list of JSC “Atomstroyexport” nuclear power projects abroad is presented in Table A2.1.

Table A2.1. JSC “Atomstroyexport” NPP construction projects abroad

    Unit               Type                Capacity (MW)       Commissioned        Status

(1) Bulgaria
                                            NPP 'Kozloduy’
    Unit #1                VVER-440               440                1974         In operation. The
                            (V-230)                                               aim of cooperation
    Unit #2                   ---"---             440                1975         in NPP
    Unit #3                                       440                1981         modernization is to
                              ---"---
                                                                                  enhance safety
    Unit #4                   ---"---             440                1982
    Unit #5               VVER-1000              1000                             In operation. The
                           (V-320)                                                aim of cooperation
    Unit #6                   ---"---            1000                             in NPP
                                                                                  modernization is to
                                                                                  enhance safety
                                             NPP ‘Belene’
    Unit #1               VVER-1000             1000                              Construction was
                           (V-320)                                                stopped in 1991
    Unit #2                 ---"---              1000

(2) GDR – Eastern Germany
                                            NPP ‘Reinsberg’
                           VVER-210               70                 1966          Put out of
                                                                                   operation in 1990
                                              NPP ‘Nord’
    Unit #1                VVER-440              440                 1974          Put out of
                            (V-230)                                                operation in 1990
    Unit #2                   ---"---             440                1975
    Unit #3                   ---"---             440                1978
    Unit #4                   ---"---             440                1979



                                                                                            IBRTM
                                                                                  77
  Unit #5          VVER-440                 440                Pre-
                    (V-213)                                    commissioning of
  Unit #6            ---"---                440                Unit 5 and
  Unit #7                                   440                construction of
                     ---"---
                                                               Units 6 to 8 was
  Unit #8            ---"---                440
                                                               stopped in 1990
                                     NPP ‘Stendal’
  Unit #1          VVER-1000            1000                   Construction was
                       (V-320)                                 stopped in 1990
  Unit #2      ---"---             1000

(3) Finland
                                     NPP ‘Loviisa’
  Unit #1         VVER-440              440             1977   In operation
                (V-213) with ice
                   condenser
  Unit #2            ---"---                440         1980

(4) Hungary
                                      NPP ‘Paks’
  Unit #1          VVER-440              440            1983   In operation
                    (V-213)
  Unit #2            ---"---                440         1984
  Unit #3            ---"---                440         1985
  Unit #4            ---"---                440         1986
  Unit #5         VVER-1000                1000                NPP design was
  Unit #6           ---"---                1000                performed. Work
                                                               was stopped in
                                                               1989
                                          New NPP
  Unit #1          VVER-640                 640                Bidding materials
  Unit #2          VVER-640                 640                for NPP were
                                                               submitted.
                                                               Decision on the
                                                               tender award was
                                                               postponed

(5) Poland
                                    NPP ‘Zarnowiec’
  Unit #1          VVER-440              440                   Construction was
                    (V-230)                                    stopped in 1990
  Unit #2            ---"---                440
  Unit #3            ---"---                440
  Unit #4            ---"---                440

(6) Slovakia
                                   NPP A-1 ‘Bohunice’
                    KS-150               150            1972   Put out of
                                                               operation in 1977.
                                                               Decommissioning
                                                               is under way
                                   NPP V-1 ‘Bohunice’
  Unit #1          VVER-440              440            1979   In operation.
                    (V-230)                                    Modernization is in


                                                                     IBRTM
                                                                                  78
  Unit #2       ---"---           440                  1980   progress in order to
                                                              enhance safety
  Unit #3     VVER-440            440                  1984   In operation.
               (V-213)                                        Modernization
  Unit #4       ---"---           440                  1985   activities started in
                                                              1999.
                           NPP ‘Mochovce’
  Unit #1     VVER-440          440                    1998   In operation
               (V-213)
  Unit #2       ---"---          440                   2000
  Unit #3       ---"---          440                          Work was stopped
  Unit #4       ---"---          440                          in 1990
                           Cyclotron Center
                                                2004          Design and
                                                              construction of
                                                              several laboratories
                                                              for the Center is in
                                                              progress

(7) Czechia
                            NPP ‘Pukovany’
  Unit #1     VVER-440           440                   1985   In operation.
               (V-213)                                        Modernization
  Unit #2       ---"---         440                    1986   activities are in
  Unit #3                       440                    1987   progress
                ---"---
  Unit #4       ---"---         440                    1987
                            NPP ‘Temelin’
  Unit #1     VVER-1000        1000                    2001   At start-up stage
               (V-320)
  Unit #2       ---"---          1000                  2002   Under construction
  Unit #3     VVER-1000          1000                         NPP construction
               (V-320)                                        was stopped in
  Unit #4       ---"---          1000                         1991

(8) Cuba
                            NPP ‘Juragua’
  Unit #1     VVER-440          440                           Work at Units 1&2
               (V-213)                                        was temporarily
  Unit #2       ---"---           440                         stopped in 1992.
  Unit #3                         440                         The issue of
                ---"---
                                                              construction
  Unit #4       ---"---           440
                                                              completion, incl.
                                                              The Russian
                                                              participation, is
                                                              under review


(9) Libya
                                NPP ‘Sirt’
              VVER-440    Incl. 40,000 cub. m                 Work for NPP was
                          of demineralized                    stopped in 1984 at
                          water per day                       the stage of NPP
                                                              siting feasibility
                                                              study and design


                                                                    IBRTM
                                                                                      79
                                                                    development.

(10) North Korea
                                           NPP
  Unit #1           VVER-640                                        In 1988-1990 the
  Unit #2             ---"---                                       survey was carried
  Unit #3                                                           out to select an
                      ---"---
                                                                    NPP site. Finally,
  Unit #4             ---"---                                       „Sinpho‟ site was
                                                                    selected. Further
                                                                    activities were
                                                                    stopped in 1991.


(11) Iran
                                      NPP ‘Bushehr’
                   VVER-1000            1000                2002   Design work and
                                                                   NPP Unit 1
                                                                   completion based on
                                                                   the Russian design
                                                                   are in progress

(12) China
                                      NPP ‘Tianwan’
  Unit #1          VVER-1000             1000               2004   Design and
  Unit #2            ---"---             1000               2005   construction work is
                                                                   under way
                                  Gas Centrifugal Factory
  Stage 1                                                   1996   In operation
  Stage 2                                                   1998   In operation
  Stage 3                                                   2003   Under construction

(13) India
                                    NPP ‘Kudankulam’
  Unit #1          VVER-1000             1000               2008   Elaboration of
  Unit #2          VVER-1000             1000               2009   working
                                                                   documentation and
                                                                   construction are
                                                                   under way

(14) Kazakhstan
                                 NPP ‘South Kazakhstan’
  Unit #1          VVER-640             640                        The Agreement on
  Unit #2            ---"---            640                        participation in NPP
  Unit #3                               640                        construction is ready
                     ---"---
                                                                   for signing

(15) Ukraine
                          NPP ‘Khmelnistky’                        The Agreement on
  Unit #2          VVER-1000             1000                      participation in NPP
                             NPP ‘Rovno’                           completion with
  Unit #4          VVER-1000             1000                      granting of the RF
                                                                   State Credit is being
                                                                   drafted




                                                                          IBRTM
                                                                                                   80

The activities of JSC “Atomstroyexport” on the world market have strong and long-term
prospects. Construction of nuclear power projects abroad belongs to the strategic types of
cooperation. With the continuous support of Minatom, “Atomstroyexport” has got all the
engineering and intellectual capabilities combined with vast experience to actively promote the
Russian power engineering in the world market. The nuclear power plants built by the Company
for the customers in Bulgaria, Hungary, Czechia, Slovakia, and other countries, perform reliably.
In most cases, the guaranteed parameters have been exceeded. In terms of performance and
economic characteristics, Loviisa NPP in Finland and Paks NPP in Hungary are among the best
nuclear power plants in the world. For example, Loviisa NPP in Finland, which was built on the
Russian design basis and incorporated equipment from third countries, is operated very
successfully. In terms of its performance and economic characteristics, in particular, the load
factor and safety level, it ranks among the world's best, despite the fact that it was built more than
20 years ago.

The latest projects of JSC “Atomstroyexport” include construction of two power units (2000 MW
total) in China, a NPP of similar capacity in India and one power unit of 1000 MW in Iran.
Efficient activities are undertaken in ASE relationship with the customers in Czechia, Slovakia,
and CIS countries. The tender for modernization of Kozloduy power units (Bulgaria) was
awarded to the Russian organizations forming a part of European Consortium Kozloduy. The
advanced scientific, technical, and design bases and close contacts with foreign customers made it
possible for JSC “Atomstroyexport” to establish a constantly increasing long-term portfolio.

Nowadays, JSC “Atomstroyexport” offers to its partners the NPP designs which have been
developed within the framework of the "Ecologically Safe Power Engineering" State Program.
These designs are based on the Russian norms and standards in due consideration of the
international requirements and IAEA recommendations. The latest generation of upgraded reactor
installations ensures absolutely new and high safety level.

The contribution made by "Atomenergoexport" and "Zarubezhatomenergostroy"
(“Atomstroyexport” predecessors) to the productive development and international cooperation
was marked by "Gold Mercury International Award" (1980). Another "International Trophy for
Technology" was awarded in 1982, thus confirming high quality of equipment supplied by the
associations. In 1983, the 4-th Africa Award for development of economic cooperation with the
countries of Africa was given.


A2.5. QUALITY ASSURANCE PROGRAMS

Nowadays, JSC “Atomstroyexport” implements a thorough Quality Assurance (QA) system
which matches best world practices of the time. The Company's Quality System is based on
international codes of ISO 9000 Safety Series. General management of quality assurance issues is
allocated to the General Director. The Standardization & Quality Management Division is
directly subordinated to the General Director. This Division regulates the issues related to
functioning of the quality system in JSC “Atomstroyexport” as a whole and coordinates
fulfillment of QA obligations with regard to particular cooperation projects.


                                                                                         IBRTM
                                                                                               81
To ensure fulfillment of the contractual obligations at various stages of construction of the
cooperation projects, i.e. design, supply of equipment, construction, erection, commissioning,
consultation and engineering services, the quality assurance programs are developed for specific
projects in consideration of the requirements of national standards of JSC “Atomstroyexport”
countries-customers and IAEA recommendations for nuclear power projects. The above programs
provide for the following QA activities:
         to define organizational structure and allocate responsibilities and authorities between
           the structural units of JSC “Atomstroyexport” for the purpose of implementation of
           each particular project;
         to plan the QA activities;
         to qualify the prospective Company's suppliers/contractors;
         to carry out QA audits, quality surveillance and acceptance inspections for the
           products while fulfilling the contractual obligations.

In addition to the activities mentioned above and depending upon the requirements set up by the
customers, some other organizational and engineering measures are performed in order to solve
the QA issues.

The department of audits, expertise and certification of the Division of Standardization and
Quality management carries out periodical checks of its subcontractors to confirm the conformity
to ISO 9001 standard.


A2.6. FOREIGN PARTNERS

Over the years of their activities, the associations, and later JSC “Atomstroyexport” (ASE)
founded on their basis have established close business relations with more than 50 leading
companies on all continents, from Europe to North and South Americas, Asia, Africa, and
Australia.

They partners of JSC “Atomstroyexport” include such world-known corporations as:
 Siemens AG;
 Westinghouse ABB;
 Framatome ANP;
 Electricite de France;
 Ansaldo;
 Philips;
and others.

JSC “Atomstroyexport” has established and maintains firm relations with the governmental and
industrial institutions in the nuclear energy field in Bulgaria, Finland, Hungary, Slovakia,
Czechia, Cuba, Iran, China, India, Kazakhstan, Ukraine.




                                                                                      IBRTM
                                                                                         82
A2.7. SYSTEM OF RELATIONS WITH RUSSIAN SUBCONTRACTORS

The position of JSC “Atomstroyexport” in Russian nuclear export-import structure is shown in
Fig. A2.2.




                                                                                IBRTM
                                                                                                  83

Comments to Fig. A2.2:
(1) As in the current time 100% of the company's stock is state-owned (are at the disposal of the
RF Ministry of property relations), all contracts signed by JSC “Atomstroyexport” undergo a
thorough a priori coordination at the RF ministries and committees, such as Minatom RF, RF
Ministry of property relations, RF Ministry of economic development and trade, Federal security
service (FSB), RF ministry of foreign affairs, RF Ministry of finance, and the more important
deals – in the RF Government. At the same time, JSC “Atomstroyexport” performs its operations
in Russia and abroad basing on the market principles, i.e., by signing contracts with the Minatom
RF, Russian and foreign partners for each particular case.

(2) The agreements and contracts with Minatom RF (federal level) define the status and
competence of JSC “Atomstroyexport”, the fields and directions of its activity, and the terms of
distribution of the profits gained from realization of the contracts with foreign partners.
According to the adopted hierarchy, JSC “Atomstroyexport” has the same foreign trade status as
JSC “Techsnabexport” and JSC “Tvel” (2nd level in Fig. A2.2).

(3) Implementation of NPP construction programs in foreign countries is performed by JSC
“Atomstroyexport” on the basis of the designs developed by the leading scientific and design
companies of Russia, like “Atomenergoproject”, OKB "Gidropress", RRC “Kurchatov Institute”
and others. The NPPs under construction are fitted with the equipment manufactured at such
known manufacturing plants as Machine-Building Plant “ZIO-Podolsk”, “Izhora Works”, Plant
“Electrosila”, and others.

(4) Acting on its own, JSC “Atomstroyexport” signs contracts with the leading Russian
enterprises (level 3 in Fig. A2.2) and foreign partners. These contracts fix the volumes and
deadlines for the performance of particular works, the conditions of raw materials procurement
and final product supplies, the conditions of payments, etc.

(5) Many Russian scientific, design, development, maintenance organizations, manufacturers of
specific equipment, etc. are being involved in the ongoing projects (4th level in Fig. A2.2). The
contracts with these organizations are signed directly by the Russian enterprises represented by
level 3 in Fig. A2.2.

(6) In its relations with foreign customers JSC “Atomstroyexport” not only relies on Russia's
great scientific, technological and industrial potential, but also closely cooperates with design and
civil companies in customers' countries, employing manufacturers and civil companies of these
countries for supplies of equipment and materials and for site work performance, on a contractual
basis.

(7) Design and construction of NPP abroad are usually carried out by JSC “Atomstroyexport” in
cooperation with foreign customers, i.e. the customers of JSC “Atomstroyexport” are given an
opportunity to develop designs of individual buildings and structures on their own, as well as to
perform a number of activities and participate in the supplies of equipment even for the
contracted projects. In a number of cases the engineering documentation and production
technology for some equipment are handed over to the customers, so that they could start their
own production with assistance of specialists from JSC “Atomstroyexport” sent to a customer's

                                                                                        IBRTM
                                                                                   84
country. Moreover, there were cases when such equipment has been later imported by JSC
“Atomstroyexport” as well as by other countries for the domestic NPPs.




                                                                           IBRTM
                                                                                                      85

            Level 1
Federal level     Ministry of
                    Russian
                 Federation on
                 Atomic Energy
                   (Minatom)




                         Level 2
General Supplier and         Joint stock company
General Contractor for       “Atomstroyexport”
NPP construction abroad              (ASE)

Supplier of nuclear fuel      Joint stock company
(including spent fuel        "Techsnabexport" and
return and reprocessing)      Joint stock company
                                      “Tvel”



                                      Level 3
Leading organizations involved in        Branches of "Atomenergoproekt"
foreign projects                         Institute (Moscow and St.Petersburg) -
                                         NPP General Designers.
                                         Experimental and Design Bureau
                                         "Gidropress" (OKB "Gidropress") -
                                         General Designer of Nuclear Steam
                                         Supply System (NSSS).
                                         Russian Research Center "Kurchatov
                                         Institute" (RRC KI) - scientific
                                         supervisor for NPP projects.
                                         SNIIP - designer and supplier of
                                         special control systems.
                                         "Atomtechenergo" - commissioning
                                         company.
                                         All-Russian Research Institute for
                                         Nuclear Power Plant Operation
                                         (VNIIAES) - scientific supervisor of
                                         NPP operation.
Suppliers of equipment                   Factories and plants subordinated to
                                         Minatom and other ministries




                                                Level 4
Subcontractors and subsuppliers for 3rd Level       Scientific, design, development, maintenance
entities                                            companies; manufacturers of specific equipment.




                                                                                             IBRTM
                                                                                     86
Fig. A2.2. The position of JSC “Atomstroyexport” in Russian nuclear export-import
structure




                                                                             IBRTM
                                                                                                 87

(8) Having a multi-year experience in construction of nuclear power and research projects, JSC
“Atomstroyexport” builds relations with its partners on the basis of mutual economic benefits,
being guided by the performance and economic characteristics and commercial conditions they
propose. The declared basic principles of cooperation in relations with the partners both in Russia
and abroad are:
     striving for mutual benefits from contracts and agreements signed;
     attentive and respective attitude to a partner;
     recognition of the partner's right to defend his interests by means of all supporting
       evidence;
     complete and timely fulfillment of its obligations under contracts and agreements;
     assurance of high quality of the products supplied and services rendered;
     rendering of feasible assistance in fulfillment of partners' obligations, if requested;
     provision of exhaustive information to its partners regarding progress of performance of
       its obligations;
     keeping the promises given;
     maximum impartiality and friendliness in solving disputes or conflicts, if any.


A2.8. FINANCIAL INDICATORS & ANALYSIS

Being a closed type joint stock company, JSC “Atomstroyexport” has no obligation to publish its
financial reports, and does not do this so far. The actual reason for such a difference is that most
of JSC “Atomstroyexport” foreign operations (construction of NPPs in Iran, India, China
included) are still accomplished through the credits given by the RF Government (the repayment
of which from the customers is either delayed or bounded by particular additional conditions).
The officials of JSC “Atomstroyexport” stress that the company has no interest in publishing any
additional details on its top management structure and financial indicators.

The total volume of company's export in 2001 constituted US$ 424 million. For FY 2002 the
forecast is US$ 900 million.


A2.9. PLANS & PROSPECTS

Basic goals to be pursued by JSC “Atomstroyexport” in 10 - 15 years to follow are:

(1) To accomplish the construction of new NPPs in Iran, China and India. To negotiate and
initiate new NPP construction deals with these countries:

   After signing of General Framework Agreement, in the end of 2001 JSC “Atomstroyexport”
    has started implementation of a series of contracts for NPP "Kudankulam" with two VVER -
    1000 reactor units.
   JSC “Atomstroyexport” has started implementation of the contracts for two 1,000 MW power
    units in China. Similar design approaches will be applied for construction of Bushehr NPP in
    Iran.


                                                                                       IBRTM
                                                                                               88
   Completion of unit 1 of the "Bushehr" NPP (Iran) on the basis of Russian VVER-1000 design
    is in progress.

(2) To perform the modernization of NPPs already operating in several foreign countries:

   The nuclear power plants with VVER-440 reactors built in Bulgaria, Czechoslovakia and
    Hungary in the 1970s and 1980s fully conformed to the reliability and safety standards set for
    the nuclear power plants at the time when they were built. These nuclear power plants were
    not inferior in reliability and safety to those built in the same period in Western European
    countries and the United States.
   Kozloduy NPP in Bulgaria, Bohunice NPP in Slovakia, Dukovany NPP in Czechia, Paks NPP
    in Hungary still demonstrate reliable and stable operation. However, considering the ever
    growing attention towards environmental protection and elimination of possible causes of
    emergency events, JSC “Atomstroyexport” requested the leading design institutes of Russia to
    develop and implement the modernization programs for the above power units.

(3) To promote permanent technological updating of the existing NPP designs, to promote new
designs developed by Russian design companies

   JSC “Atomstroyexport” constantly follows technological updating of the NPP designs
    developed. The Russian design companies develop new NPP designs which take into account
    the advanced international safety standards for reactor installations and apply the design
    approaches aimed at timely prevention and elimination of the emergency consequences.
   Special attention is given to fitting out nuclear power plants with sophisticated computer-
    aided process control systems and enhancing quality of the safety-related equipment and that
    for nuclear waste processing and disposal.
   The next step in this direction was development of 640 MW power unit and new generation
    of 1000 MW power units. These designs most fully meet current safety requirements and that
    was confirmed by IAEA experts and representatives of other authoritative international
    agencies. Promotion of these designs at world markets is one of the goals of JSC
    “Atomstroyexport”.

(4) To win the contracts for new NPP construction in the Finland, Ukraine and Kazakhstan

   JSC “Atomstroyexport” with participation of the Russian companies - equipment
    manufacturers and designers will submit bid documents for NPP 91/99 design developed for
    the conditions of Finland, which received positive opinion of the Finnish Safety Authorities.
    Presently, the similar design is being implemented at Tianwan NPP in China. For new NPP
    construction implementation in Finland. JSC “Atomstroyexport” plans to invite a number of
    European and Finnish companies, the share of which in the Project, by preliminary estimate,
    will cover more than 50% of the Project cost.
   In December 2000 the Contract Draft was initiated by the Ukrainian Customer and the
    Consortium of Atomstroyexport and Framatome ANP. It defines the scope and costs of
    completion and modernization of NPP Khmelnitsky Unit 2 and NPP Rovno Unit 4.
    Implementation of the Project will be started after signing of the Credit Agreement by the
    Government of Ukraine with the European Bank for Reconstruction and Development and
    EU Commission of Atomic Energy.

                                                                                      IBRTM
                                                                                            89
   Agreement on participation of JSC “Atomstroyexport” in the construction of three units with
    reactors VVER-640 at NPP "South-Kazakhstan" (Kazakhstan) is ready for signing.




                                                                                   IBRTM
                                                                                                90
A2.10. KEY EVENTS OVER THE PAST YEAR

Listed below are the key events associated with JSC “Atomstroyexport” company (over the past
year, in a reverse chronological order). Particular comments are provided when appropriate.

   02.11.2002
    Dr. V. Chaturvedi, Chairman and Managing Director of NPCIL and Mr. V. Kozlov, Director
    general of JSC “Atomstroyexport” signed the contract for the training of the Indian personnel
    on operation and maintenance of NPP under construction in accordance with the General
    Frame Agreement. The Contract provides for the complex training at the base of
    Novovoronezh Training Center.

   16.10.2002
    The installation of Tianwan NPP Unit 2 steel leak-tight containment is completed.

   02.09.2002
    Some 600 Russian specialists began work on a key phase of the $US 800 million project to
    build the first power unit of the Bushehr NPP in Iran.

    Comment:
    The plant would enter commercial operation in 2004, and the nuclear fuel would likely be
    loaded in the reactor of the first unit in December 2003.

   31.07.2002
    JSC “Atomstroyexport” prepares its proposals for negotiating a new NPP construction in
Finland

   31.05.2002
    Temelin NPP unit 2 reached the minimum controlled level.

    Comment:
    Minister for Industry of Czech Republic, Chairman of SUJB (Czech analogue of
    Gosatomnadzor RF) and Temelin NPP management have expressed their profound gratitude
    to the managers and experts of Russian organizations for engineering support they had
    provided in arrangement of conditions for successful bringing unit 2 to the minimum
    controlled power level. The formal comment released in Check media refers to Temelin NPP
    as to NPP "equipped with Russian reactor plant of the third generation..."

   16.05.2002
    The Russian government approved a draft co-operation agreement with Myanmar (Burma) on
    the construction of a centre for nuclear studies.

    Comment:
    Under the agreement, the two countries will cooperate in designing and building a nuclear
    centre, a research nuclear reactor with a thermal capacity of 10 MW, two laboratories, a
    nuclear silicon alloying installation, as well as the support infrastructure, including an
    installation for the disposal of nuclear waste and a waste burial site.

                                                                                        IBRTM
                                                                                                91
    Under the draft co-operation agreement, Russian Federation will design the centre, render
    technical assistance in choosing and examining the construction site, and supply equipment
    and materials. Russia will also deliver fresh nuclear fuel.

   24.04.2002
    JSC "Atomstroyexport" signed contracts with JSC "KomplektAtom-Izhora" and UK "Silovy
    Mashiny" within the framework of development of Russian-Indian cooperation in the field of
    NPP "Kudankulam" construction as well as in compliance with the signed Contract to
    implement obligations of Russian side for supply of long term manufacturing equipment.

   07-16.04.2002
    During the JSC "Atomstroyexport" delegation stay in Hanoi, a series of meetings was held
    with heads of Vietnamese organizations who were authorized by the government of SRV to
    elaborate a preliminary technical and economic substantiation for NPP construction in
    Vietnam.

   05.04.2002
    Russia is holding talks with Iran on construction of the second unit at the Bushehr nuclear
    power plant.

    Comment:
    Around 3,900 Russian and Iranian specialists now work at the construction site of the first
    unit of the Bushehr nuclear power plant. In 2001, Russia partially shipped the main
    equipment, including the reactor. All in all, 5,000 tones of equipment were shipped.

   03.04.2002
    The reactor pressure vessel for Unit 1 was erected in accordance with the time schedule of
    Tianwan NPP construction.

   31.03.2002
    The official ceremony of foundation slab first concrete of NPP "Kudankulam" Unit 1 took
    place in south of India.

   14.03.2002
    Fuel loading was carried out at NPP Temelin (Czechia).

   21-23.02.2002
    The seventh session of the Intergovernmental Russian-Bulgarian Commission on trade-
    economic and scientific-technical co-operation took place in Sofia.

    Comment:
    Having reviewed the status of co-operation in the nuclear power engineering the commission
    recommended to renew the activities of the task-force on co-operation in the nuclear power
    engineering, as well as to continue the joint activities in the spheres of mutual interest:
    modernization of NPP Kozloduy Units, analysis of the possibility to develop FS for new NPP
    construction using the equipment delivered to Bulgaria, updating of the nuclear fuel cycles for
    NPP Kozloduy Units.

                                                                                      IBRTM
                                                                                            92

   12.02.2002
    JSC "Atomstroyexport" and Nuclear Power Corporation of India Ltd. signed a contract on the
    supply of long-term manufacture equipment, as well as of the first priority equipment and
    materials from Russia to NPP "Kudankulam" in India.

  11.01.2002
   NPP Temelin Unit 1 (Czechia) was brought to full power and experimental operation is under
way.

    Comment:
    The Russian companies render technical assistance on commissioning and operation under the
    contracts signed between JSC “Atomstroyexport” and NPP Temelin. JSC “Atomstroyexport”
    also participates in the commissioning works at NPP Temelin Unit 2.

   16.11.2001
    November 16, a VVER-1000 reactor for the Bushehr-1 NPP, manufactured by Izhorskiye
    Zavody (Izhora Plants) of St. Petersburg was shipped to Iran.

    Comment:
    The acceptance certificate for the reactor was signed in by Gosatomnadzor, Russia‟s nuclear
    regulator, at the end of September. The contract price amounts to US$ 900 million.




                                                                                   IBRTM
                                                       93
Annex A3




           JOINT STOCK COMPANY “TVEL”, OPEN TYPE
                          (TVEL)




                                               IBRTM
                                                                                                      94
A3.1. GENERAL DATA & BACKGROUND

Requisites

Joint stock company “Tvel”, open type
24/26 Bolshaya Ordynka, 101000, Moscow, Russia.
Telephone: 007 (095) 2394922
Fax: 007 (095) 2394404
E-mail: root@tvel.ru
Web: www.tvel.ru

Formation history

Joint stock company “Tvel” (JSC “Tvel”) was established by the Decree of the President of the
Russian Federation № 166 of 08.02.96. The Company holds the status of an operating
organization effecting the goals of efficient and safe functioning of the whole nuclear complex of
Russia. The company ensures performance of international obligations and safeguards in the field
of nuclear technologies and controls the utilization of nuclear fuel as well as deliveries of the
products of nuclear fuel cycle.

JSC “Tvel” provides its customers with complex services related the supplies of nuclear fuel. As
of today, these services include the design of competitive fuel cycles, production and supplies of
nuclear fuel in compliance with customer's specifications, scientific and technical support of fuel
operation.

One of each 6 reactors operating in the world uses fuel manufactured at JSC “Tvel” enterprises.

Being a production and trade company, JSC “Tvel” is different from JSC “Techsnabexport” and
JSC “Atomstroyexport” which are purely the external trade entities (carry no production on its
own). However, the external trade status of JSC “Tvel” is the same as that of the two above
companies, except that the field of activity is different: JSC “Tvel”‟s main item of export is
nuclear fuel (in the form of pellets, fuel rods, and fuel assemblies).

The specific of the activities of JSC “Tvel” is based on the integration of enterprises of nuclear
fuel cycle in one technological multi-link chain for the production of nuclear fuel and its
components. It defines the important role of the Company in the nuclear power complex of
Russia nowadays.

JSC “Tvel” is a holding joint stock company, open type, with 100 % of its shares being currently
state-owned. The registered capital of the company includes control shares of each of its six joint
stock enterprises fixed as a federal property of Russia.

JSC “Tvel” is included to the list of enterprises that produce products of strategic importance for
the domestic defense and security needs. In June 2002 Mr. M. Kasyanov, Prime-Minister of
Russia, had handed over to the RF President Administration the draft of a decree on the list of
enterprises that produce strategically important products and are not subject to privatization. The
foundations for being included in this list are: (i) the enterprise shall be state-owned; (ii) if it is a

                                                                                            IBRTM
                                                                                                  95
joint-stock company, the State shall own, at least, a blocking packet of shares; (iii) the enterprise
shall produce the unique products that are of strategic importance for national security; (iv) the
enterprise shall belong to the infrastructure of federal level.

JSC “Tvel” also incorporates the Joint stock company “Concern Tvel”, closed type. JSC
“Concern Tvel” was founded in 1991 by the joint stock enterprises now incorporated into JSC
“Tvel”.

The six joint stock enterprises currently incorporated to JSC “Tvel” are:

(1)Joint-stock company “Mashinostroitelny Zavod” (MSZ), Electrostal, Moscow region;
         Founded in 1917;

(2) Joint-stock company “Novosibirsk Chemical Concentrates Plant” (NCCP), Novosibirsk;
         Founded in 1948;

(3) Joint-stock company “Chepetsky Mechanical Plant” (CMP), Glazov, Udmurt Republic;
         Founded in 1946;

(4) Joint-stock company “Zabaikal Mining and Concentrating Combine” (ZabGOK),
Pervomaisky, Chita region;
         Founded in 1937;

(5) Joint-stock company “Krasnoyarsk Chemical and Metallurgical Plant” (KCMP), Krasnoyarsk;
         Founded in 1956;

(6) Joint-stock company “Commercial Center №100”, Moscow.
         Founded in 1953.


A3.2. COMPANY'S STRUCTURE

The structure of JSC “Tvel” is shown in Fig. A3.1.

Comment to Fig. A3.1:

The enterprises of JSC “Tvel”:

       (1) Joint-stock company “Mashinostroitelny Zavod” (MSZ), Electrostal, Moscow region
       Address: 144001 Moscow region, Electrostal, K. Marx str., 12
       Phone: (095) 7029901
       Fax: (095) 7029221

       (2) Joint-stock company “Novosibirsk Chemical Concentrates Plant” (NCCP),
       Novosibirsk
       Address: 638038 Novosibirsk, B. Khmelnitsky str., 94
       Phone: (3832) 748454

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                                  96
Fax: (3832) 743071
Web: http://www.nccp.ru




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                            Joint stock company “Tvel”, open type
                     24/26 Bolshaya Ordynka, 101000, Moscow, Russia.
                                   Tel: 007 (095) 2394922
                                   Fax: 007 (095) 2394404
                                    E-mail: root@tvel.ru

           Directorate for commerce
           Directorate for production & technical issues and security
           Directorate for scientific & technical development
           Directorate for economics & corporate planning
           Directorate for economic strategy & property management
           Directorate for international & external economic activity
           Directorate for financial reports & analysis
           Directorate for general issues & social development
           Legal department




   Joint stock Company “Concern Tvel”                   Enterprises of Joint stock Company
                                                                       “Tvel”
  101000 Moscow, B. Ordynka str., 24/26
  Phone: (095) 2394788                                  Joint stock company
                                                         “Mashinostroitelny Zavod” (MSZ),
                                                         Electrostal, Moscow region;
                                                        Joint stock company “Novosibirsk
                                                         Chemical Concentrates Plant” (NCCP),
                                                         Novosibirsk;
                                                        Joint stock company “Chepetsky
                                                         Mechanical Plant” (CMP), Glazov,
                                                         Udmurt Republic;
                                                        Joint stock company “Zabaikal Mining
                                                         and Concentrating Combine”
                                                         (ZabGOK), Pervomaisky, Chita region;
                                                        Joint stock company “Krasnoyarsk
                                                         Chemical and Metallurgical Plant”
                                                         (KCMP), Krasnoyarsk;
                                                        Joint stock company “Commercial
                                                         Center №100”, Moscow




Fig. A3.1. JSC “Tvel” structure


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                                                                                             98
       (3) Joint-stock company “Chepetsky Mechanical Plant” (CMP), Glazov, Udmurt Republic
       Address: 427000 Udmurtia Republic, Glasov, Belova str., 7
       Phone: (34141) 72415
       Fax: (34141) 72994
       Web: www.chmz.udm.net

       (4) Joint-stock company “Zabaikal Mining and Concentrating Combine” (ZabGOK),
       Pervomaisky, Chita region
       Address: 673382 Chita region, Pervomaisky, Mira str., 18
       Phone: (30262) 42302
       Fax: (30262) 41010

       (5) Joint-stock company “Krasnoyarsk Chemical and Metallurgical Plant” (KCMP),
       Krasnoyarsk
       Address: 660079 Krasnoyarsk, Matrosova str., 30
       Phone: (3912) 660185
       Fax: (3912) 340939

       (6) Joint-stock company “Commercial Center №100”, Moscow
       Address: 127253 Moscow, Dmitrovskoye highway, 116, bldg. 3
       Phone: (095) 4007474
       Fax: (095) 4007277


A3.3. KEY PERSONALIA

                                         JSC “Tvel”

President: Nyago Aleksandr Nikolaevich;
Vice-president: Lavrenyuk Petr Ivanovich;
Vice-president: Proskuryakov Leonid Dmitrievich;
Vice-president: Zubakov Vladimir Alekseevich;
Vice-president: Kozhin Vyatcheslav Mikhailovich.

The board of directors as elected during the shareholders meeting held on June 26, 2002 included
the following personalia:

       (1) Solonin Mikhail Ivanovich - First deputy minister of the RF Ministry for atomic
       energy (Minatom RF);

       (2) Vinogradov Vladimir Grigorievich – First deputy minister of Minatom RF (was
       dismissed from this position in Minatom in November, 2002);

       (3) Kamenskikh Ivan Mikhailovich – Deputy minister of Minatom RF;

       (4) Antipenko Evald Yevgenievich – Deputy minister of the Ministry of Russian
       Federation for atomic energy (Minatom RF);

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       (5) Tikhonov Aleksandr Vasilievich - head of the department of fuel and energy complex
       of the RF Ministry of property relations;

       (6) Koryashkin Georgi Alekseevich – head of the department of economics and
       assessment regulation of the RF Ministry of property relations;

       (7) Medvedev Aleksandr Aleksandrovich - head of the department of normative and
       legislation assurance and regulation of property relations of Minatom RF;

       (8) Rogatchev Aleksei Anatolievich - deputy head of the department of legal provision of
       the RF Ministry of property relations;

       (9) Nyago Aleksandr Nikolaevich – President of JSC “Tvel”;

       (10) Smirnov Vladimir Alekseevich – Director general of JSC “Techsnabexport”;


                            Joint stock company “Concern Tvel”

Director general: Karetnikov Vladimir Vladimirovich;

                  Joint-stock company “Mashinostroitelny Zavod” (MSZ)

Director general: Razin Vladimir Petrovich;

         Joint-stock company “Novosibirsk Chemical Concentrates Plant” (NCCP)

Director: Afanasyev Vladimir Leonidovich;

                Joint-stock company “Chepetsky Mechanical Plant” (CMP)

Director general: Rozhdestvensky Vladimir Vladimirovich;

     Joint-stock company “Zabaikal Mining and Concentrating Combine” (ZabGOK)

Director: Adosik Gennady Mikhailovich;

     Joint-stock company “Krasnoyarsk Chemical and Metallurgical Plant” (KCMP)

Director: Kovyadin Dmitry Mikhailovich;

                Joint-stock company “Commercial Center №100”, Moscow

Director: Goncharov Aleksei Vasilievich.




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A3.4. FIELDS OF ACTIVITY & MAIN RESULTS

                                          JSC “Tvel”

JSC “Tvel” is a diversified company that fabricated a wide nomenclature of produce. JSC “Tvel”
is an authorized company for performing export-import operations in particular trends on its own.
Main fields of JSC “Tvel” activity are the production and sales of nuclear fuel.

Different from JSC “Techsnabexport” and JSC “Atomstroyexport”, JSC “Tvel” is not a purely
external trade company, its responsibilities also include the production of nuclear fuel and other
products and, to a significant degree, the provision of similar productions and services for the
domestic Russian market. At the same time, in conformity with the RF Government ordinance of
29.03.2002 JSC “Tvel” is an authorized external trade organization for the supplies of nuclear
fuel abroad and for the repatriation of spent fuel.

Development of cooperation with CIS-countries is a priority for JSC “Tvel”. Disruption of the
existed in USSR cooperation between industrial enterprises directly affected enterprises of
nuclear fuel cycle. To improve situation in this field JSC “Tvel” is developing cooperation with
enterprises of Ukraine and Kazakhstan by means of strategic cooperation in production and
supply of nuclear fuel and its components.

At a present time JSC “Tvel” supplies nuclear fuel to NPPs in Armenia, Bulgaria, Hungary,
Lithuania, Slovak Rep., Czech Rep., Finland and Ukraine. Altogether 72 nuclear power reactors
are using Russian fuel.

Specialists of JSC “Tvel” do their best to maintain and expand the position of the Company on
nuclear fuel market of Western Europe, which was traditionally closed for Russian enterprises.
Since 1995, enterprises of the Company supply their production to NPPs in Western Europe.
Under a long-term contract, JSC “Tvel” in cooperation with Siemens supplies fuel for 5 NPPs in
Germany and Switzerland.

JSC “Tvel” is looking for new markets. In 1997 a contract was signed to supply nuclear fuel to
China (NPP Lianyungang) and for delivery of the technology for its production. The company
will also supply fuel to the Chinese fast neutron research reactor. According to the
intergovernmental agreement on the construction of NPP with VVER-1000 reactors in
Kudankulam (India), JSC “Tvel” will supply fuel and equipment for these reactors. Thanks to the
active development of scientific, technical and production cooperation with Indian enterprises and
organizations, JSC “Tvel” increases its set of products and services present at the Indian market,
first of all, these are the products and services for operating BWR and PHWR reactors.

Enterprises of JSC “Tvel” are also exporting non-nuclear materials: zirconium to Germany,
Canada and Sweden; calcium to Bulgaria, Hungary, Norway and Japan; lithium to Germany,
Holland, Italy, Poland, Czech Republic and Japan.

Main export-related trends of JSC “Tvel” production activity are as follows:




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   Nuclear fuel production;

       The fuel is produced at JSC “Mashinostroitelny Zavod” and Joint-stock company
       “Novosibirsk Chemical Concentrates Plant” which are incorporated in JSC “Tvel”;

       The same JSC “Tvel” enterprises produce and supply fuel assemblies for VVER-440 and
       VVER-1000 reactors operated in Russia, in former Soviet Union countries, and in Eastern
       European countries;

       JSC “Tvel” enterprises also produce fuel assemblies according to the specifications of
       PWR reactors owned by Western utilities;

       In 2002 JSC “Tvel” had accomplished the first of a series of fuel pellets supplies to
       India‟s “Tarapur” NPP with BWR. These pellets were produced according to the
       specifications provided by the Indian side;

   Production of heavy water;

   Production of deuterium;

   Production of zirconium;

       Zirconium and products on its basis are produced by JSC “Chepetsky Mechanical Plant”;

   Production of calcium;

       The largest manufacturer of calcium in the world is JSC “Chepetsky Mechanical Plant”;

       In addition to this, the production of metallic calcium is carried out at JSC
       “Mashinostroitelny Zavod”;

   Production of lithium;

       The production of the metallic lithium and isotopic produce on its basis (lithium-7) is
       carried out at JSC “Novosibirsk Chemical Concentrates Plant”;

       Besides, metallic lithium and lithium hydrate is produced by “Krasnoyarsk Chemical and
       Metallurgical Plant”.


Investment activity of JSC “Tvel”

An important trend of JSC “Tvel” operations is investment activity related to the leasing of
equipment to incorporated enterprises.

A license for the leasing activity of JSC “Tvel” has been issued by the RF Ministry of economics
on July 8, 1998, and later had been extended up to 2005 (No. 01873 of 05.04.2000). As comes to

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the volume of leasing operations, in 1999 JSC “Tvel” was among the three top Russian leasing
companies.

For example, in 1999 signed were the agreements of a long-term financial leasing for 300 items
of technological equipment in the amount of US$ 45 million. The annually obtained profit is
spent to the investment of new projects of enterprises in conformity with the investment program,
recommendations of technical and economic board, and decisions of JSC “Tvel” board of
directors.

A register of investment programs updated on an annual basis has been created at JSC “Tvel”.
For example, as of year 2000 this register had included 7 programs with the overall volume of
funding of 29.4 US$ million.

JSC “Tvel” is a full member of the Russian association of leasing companies “Rosleasing”. JSC
“Tvel carries on an intensive cooperation and experience exchanges with top leasing companies.

In the field of investment policy, JSC “Tvel” is ready to cooperate with the domestic and foreign
partners. This cooperation, as performed on a mutually beneficial basis, should contribute to the
efficient realization of already available projects.

Scientific and technical policy of JSC “Tvel”

In the strategy of JSC “Tvel” – provision of fuel supply services to NPPs accompanied by as
broad as possible package of complementary services – a central place is occupied by an effective
scientific and technical policy in the field of development, licensing, and operation of fuel and in
the field of technical modernization of the production.

A milestone in the effective realization of JSC “Tvel”‟s scientific and technical policy was the
creation of “Tvel- Science” Association in 1999. In addition to JSC “Tvel”, this Association
incorporates the leading nuclear centers of Russia – RRC “Kurchatov institute”, VNIINM
(Bochvar institute), EDO “Gidropress”, OKBM, NIKIET (RDIPE), RIAR, IPPE, RICT.

Bringing together a powerful scientific and production potential would allow JSC “Tvel” to
finalize the development and to incorporate to the NPPs with VVER nuclear fuel and nuclear fuel
cycles of a new generation. Main operation and efficiency characteristics of new fuel essentially
surpass those of the existing fuel both, as comes to uranium flow savings, and to the operation
reliability and nuclear safety.

JSC “Tvel” awards

JSC “Tvel” is awarded with the diploma of a participant of “Leasing-2001” international
exhibition.

Organizing committee of the Third international forum “High technologies of the defense
complex” as chaired by Moscow mayor Mr. Yuri Luzhkov had awarded JSC “Tvel” by an
honorable diploma for achievements in the field of high technologies and for the participation in
“HT-2002” (“VT-2002”) exhibition.

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                            Joint stock company “Concern Tvel”

Is responsible for organization, execution and control over the business accounting with Russian,
Ukrainian NPPs, other foreign partners, and fuel cycle enterprises.

            Joint-stock company “Mashinostroitelny Zavod” (MSZ), Electrostal

Produces fuel, fuel elements and assemblies for power reactors, production and research reactors.
Produces metallic calcium, ferrite-barium anisotropic magnets, super-powerful magnets, hard
alloys and relevant products, heaters of various configurations, consumer electronics, and air
conditioners.

         Joint-stock company “Novosibirsk Chemical Concentrates Plant” (NCCP)

Produces fuel, fuel elements and assemblies for power reactors, production and research reactors.
Produces extra pure metallic lithium and its salts according to the consumer specifications,
chemical sources of current; zeolite catalysts, polyethylene-oxide.

                Joint-stock company “Chepetsky Mechanical Plant” (CMP)

Produces zirconium powder and ingots, zirconium-based alloys, technological channels for
RBMK reactors, metallic calcium (granulated, distilled, and monolithic), powder wire, ingots of
natural uranium and depleted uranium products, consumer goods.

In April 2002, several top managers of JSC “Chepetsky mechanical plant” were awarded with the
RF Government prizes in the field of science and technology (for the achievements in 2001).

     Joint-stock company “Zabaikal Mining and Concentrating Combine” (ZabGOK)

Produces mineral and chemical concentrates of tantalum, niobium, tin, fluor-spar, natural
zeolites, and gold.

      Joint-stock company “Krasnoyarsk Chemical and Metallurgical Plant” (KCMP)

Produces lithium hydroxide and carbonate, metallic lithium in cast, granulated, and profiles
forms, synthetic zeolites of NaX type, lithium hydrate.

                      Joint-stock company “Commercial Center №100”

A wholesale trade company. The nomenclature includes 100-120 items of consumer goods,
mostly domestic food stuff.




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А3.5. QUALITY ASSURANCE PROGRAMS

Assurance of the produce quality is one of the top strategic goals of the company. JSC “Tvel”‟s
policy regarding quality assurance is based on the following principles:

(1) Taking full account of being responsible for the quality , including:
     conformity with the requirements on quality as prescribed by the laws, statutes, ordinances
       of the governing bodies, standards, and the supply contracts if they define particular
       requirements to the quality;
     permanent adaptation to the ever-growing consumer requirements;
     guarantees of quality for the supplied products;
    
     organization of the preventive actions against possible deterioration in quality.

(2) Cooperation of all contract participants within a single system.

(3) permanent improvement of quality through carrying on the measures on:
     technical modernization of the produce and the systems of its production;
     elaboration of quality management systems.

(4) Unambiguous definition of the responsibilities and authorities related to quality management.
High quality of the produce is provided through the use of state-of-the-art technological
equipment and means of control, in particular, those produced by leading foreign companies. For
example, the achieved level of quality of fuel and fuel element produce is such that the fraction of
non-tight elements does not exceed 2 of each 100,000.

The strategy of quality management at JSC “Tvel” is based on the internal and external
management of quality.

The internal quality management is provision of quality in the supplies of produce and services,
realization of the projects on modernization of the equipment, technologies and control systems,
assistance in the development and elaboration of quality systems at enterprises, as based on ISO
standards and TOM ideology, etc. Quality systems of JSC “Tvel” enterprises are certified by the
authorized bodies for the conformity with international standard ISO-9002. JSC
“Mashinostroitelny zavod” and JSC “Chepetsky mechanical plant” are certified by YUV CERT
(Germany), while “Novosibirsk chemical concentrates plant” is certified by VNIIMASH, an
authorized body of the Gosstandard of Russia.

JSC “Mashinostroitelny zavod” and JSC “Chepetsky mechanical plant” are awarded with national
prize of the RF Government in the field of quality, while “Novosibirsk chemical concentrates
plant” is awarded with the diploma of the same title.

JSC “Tvel” participates in international research programs. One of them is the international
“Halden project”, within the framework of which tests of the pellets, claddings, and fuel elements
as produced at JSC “Tvel” enterprises are tested in a Norwegian research reactor. The results
obtained prove that Russian nuclear fuel meets in full the top international standards of quality.


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The internal management of quality provides for the quality of organization and commercial
activity processes of the administrative structure of the holding, and is targeted at strategic
planning, realization of the investment and innovative projects, creation and elaboration of the
holding's informational infrastructure, effective personnel management.


A3.6. FOREIGN PARTNERS

Among foreign partners of JSC “Tvel” are the largest in the world nuclear super-holdings:

   AREVA group;
   International corporation BNFL/Westinghouse/ABB.

Comment:

Nuclear super-holding AREVA was created in November, 2001. 79% of the shares belong to the
state-owned CEA-Industrie – a commercial subdivision of the French Commissariat on Atomic
Energy, another 5% - directly to the government of France. AREVA incorporates several
companies, the largest of them being Topco holding which emerged from merging of the assets of
the Framatome ANP and Cogema – the two major players in world nuclear energy. Prior to
merging, the government had procured their assets, in particular, through exchanging them for the
shares of state-owned nuclear enterprises. Framatome ANP, a joint enterprise of the French
Framatome and German Siemens, is responsible for nearly a quarter of all services on the
construction of NPPs/relevant equipment supplies in the world. Cogema is the largest in the
world company on fuel production and reprocessing. In the next few years it plans to reprocess 24
thousand tons of spent nuclear fuel from the NPPs of Europe and Japan, the amount of this deal
equals to 40 billion of US$.

JSC “Tvel” has partnership relations with state-owned and private companies in the field of
nuclear energy use in more than 20 countries, such as Germany, Canada, Sweden, Bulgaria,
Hungary, Ukraine, Kazakhstan, Norway, Japan, China, India, Netherlands, Italy, Poland, Czechia,
Slovakia, Finland, Armenia, and others.

Also cooperates with leading world manufacturers in the non-nuclear field, such as “Samsung
electronics”, Kanhtal (Sweden), and CSM (Italy).


A3.7. SYSTEM OF RELATIONS WITH RUSSIAN SUBCONTRACTORS

JSC “Tvel” performs its operations in Russia and abroad basing on the market principles, i.e., by
signing contracts with the Minatom RF, Russian and foreign partners for each particular case.

As in the current time 100% of the company's stock is state-owned (is at the disposal of the RF
Ministry of property relations), all contracts signed by JSC “Tvel” undergo a thorough a priori
coordination at the RF ministries and committees, such as Minatom RF, RF Ministry of property
relations, RF Ministry of economic development and trade, Federal security service (FSB), RF
Ministry of finance, and the more important deals – in the RF Government.

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As it was already mentioned, different from other companies with the same external trade status:
JSC “Techsnabexport” и JSC “Atomstroyexport”, JSC “Tvel” is not only a foreign trade
company, but one the largest production company in Russia as well. JSC “Tvel” claims that the
interaction between the holding company JSC “Tvel” and the enterprises incorporated into it are
based on the principle of cooperation between all participants of the contract within a single
system.

An important role in the relations between JSC “Tvel” and incorporated enterprises is attributed
to the investment activities as realized in the form of equipment leasing.

Economic strategy of JSC “Tvel” prescribes that what is beneficial to the holding should be
beneficial to the incorporated enterprise. The enterprises get benefits from leasing operations:
they obtain upgraded production facilities and new high-productivity equipment, all with
payments by installments. Leaser-enterprise gets and uses these equipment items without
decreasing its current assets, makes savings on the overheads. Paying off leasing debts is assigned
to the prime costs of the produce manufactured by the leaser, which contributes to a significant
reduction in the tax payments as shouldered by the leaser. Leaser enterprise starts to pay off
leasing debts only after the equipment is put into operation (as a rule, after 3 or 6 months).
Flexible schemes are used in the execution of leasing pay-off.

Comment:
Notwithstanding the above general claim, the buying out of JSC “Tvel” shares by State in 2001
had resulted in noticeable deterioration of profits as gained by the incorporated enterprises. The
old and new situations are illustrated by the scheme on Fig. A3.2.


                                                   JSC “Tvel”


                                                                                        Customer

   Enrichment plants




             JSC “Chepetsky                      JSC “Novosibirsk chemical
             metallurgical plant”                   concentrates plant”



Fig. A3.2. Old (dashed line) and new (solid line) schemes of JSC “Tvel” relations with
incorporated enterprises


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For example, the revenues of JSC “Novosibirsk chemical concentrates plant” have dropped from
116 million US$ in 2000 down to 101 million US$ in 2001. JSC “Novosibirsk chemical
concentrates plant” produces fuel assemblies for Russian reactors of different types. Recently,
i.e., before JSC “Tvel” became 100% state-owned, “Novosibirsk chemical concentrates plant”
had a right to procure raw materials from Russian enrichment plants and technological channels
from JSC “Chepetsky metallurgical plant” on its own. It also had a right to sell the final produce
(fuel assemblies) on its own. What happens nowadays, is just nuclear tolling as performed by JSC
“Tvel”, a holding company, see solid line in Fig. A3.2.

Over the past three years JSC “Tvel” had performed large-scale financial investments of the own
and attracted means for the provision of renovation and reconstruction of the major productions,
namely those that produce a more competitive and high-quality products.

The main objects of JSC “Tvel” investments for technological equipment renovation as
performed with the use of leasing operations are:
     modernization of the chemical, metallurgical, and rolling productions as used for the
       production of zirconium at the “Chepetsky metallurgical plant”;
     creation of domestic-equipment-based fuel pellet production lines at the “Novosibirsk
       chemical concentrates plant”;
     creation of the production of pipes of precise and extra-precise diameter at JSC
       “Mashinostroitelny zavod”, and others.

Being a relatively successful company, over the past JSC “Tvel” had sometimes just redeemed
blocking packets of the shares of nuclear industry enterprises, in particular, those that had not
been among its founders originally. Nowadays, as 100% of the JSC “Tvel” stock belongs to the
State, such operations are possible only upon coordination with the RF Ministry of property
relations.

For example, in 2002 JSC “Tvel”, which owns a blocking packet of the shares of “Priargunsky
mining and chemical production association” – a major uranium mining enterprise of Russia, had
participated in its shareholders meeting as one of the major stockholders of this association. JSC
“Tvel” representative had voted at this meeting by a state-owned packet of shares amounting to
38% of the total number of shares of “Priargunsky mining and chemical production association”.
A letter of attorney for this packet was obtained from the RF Ministry of property relations.

In the current time JSC “Tvel” is authorized to perform operations with blocking packet of the
shares of the “Moscow plant of poly-metals”.

JSC “Volzhsky mashinostroitelny zavod” which was originally among JSC “Tvel” founders went
bankrupt in 2001.


A3.8. FINANCIAL INDICATORS & ANALYSIS

On June 26, 2002 conducted was an annual shareholders meeting of JSC “Tvel”. The company‟s
production and financial activities over the past year were summarized, annual and financial

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reports were approved, including profit and loss account, also approved were the amount, the
terms , and the form of dividend payment for year 2001, elected were new members of the board
of directors and members of the auditing commission of the company, appointed was the auditor
of the company for FY 2002, approved were the new revision of company‟s charter which is now
in full conformity with the Federal law No. 120-FZ of 07.08.2001 “On the introduction of
amendments to the Federal law “On joint stock companies”, statutory documents on the board of
directors, on auditing commission, and on director general of the company in new revisions

In his summary report JSC “Tvel” president Aleksandr Nyago had mentioned that over 2001 the
corporation had achieved a new level of efficiency in its most important trends of activity, which
was due to a successive increase of its financial, economic, and organization potentials.

In 2001 the enterprises of JSC “Tvel” had produced nuclear fuel and supplied it to 30 Russian and
45 foreign power units. Export supplies of fuel were carried out to the Ukraine, Armenia,
Lithuania, countries of Eastern and Western Europe – to 12 countries on the total. In 2001 JSC
“Tvel” had won a tender for the supplies of nuclear fuel to VVER-440 reactors at the “Kozloduy”
NPP in Bulgaria, signed was a long-term (up to 2011) contract for the supplies of nuclear fuel to
“Dukovany” NPP in Czechia. In addition to this, at the VI-th Petersburg economic forum that
took place between June 18 and 22, 2002 JSC “Tvel” president Aleksandr Nyago and director
general of the Czech power company “ČEZ a. s.” Jaroslav Mil had signed a Protocol on the
supplies of Russian nuclear fuel to Czechia in 2002-2006. Chairman of the RF Federation council
Sergei Mironov and Prime-minister of the Czech Republic Milosh Zeman were present at the
signing ceremony.

Joint stock company “Pacholi. Audit company” was appointed the auditor of JSC “Tvel” for FY
2002.




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JSC “Tvel” financial report for year 2001

JSC "Tvel" balance sheet statement as of the year 2001

                                                                    Thousands of US$
  ASSETS                                                       Period      Period ending
                                                              beginning
  I. Non-current assets
  Goodwill                                                      988            3 411
  Fixed assets                                                 20 552         25 466
  Unfinished construction                                      14 986         25 178
  Payable investments to real valuables                        11 613         13 291
  Long-term investments                                        36 861         50 042
  TOTAL for Section I                                          85 001         117 388
  II. Current assets
  Inventories (stocks),                                        213 580        302 661
  including current material assets in the production          185 137        280 400
  Debtors receivables                                          120 522        102 936
  Cash assets and short term investments                        8 642         18 842
  TOTAL for Section II                                         342 744        424 439
  BALANCE                                                      427 745        541 827
  LIABILITIES                                                  Period      Period ending
                                                              beginning
  III. Capital and reserve funds
  Statutory capital                                            125 552        206 806
  Retained earnings from previous year and of the reporting     91 569        119 106
  year
  TOTAL for Section III                                        217 121        325 912
  IV. Long-term liabilities
  TOTAL for Section IV                                           0               0
  V. Short-term liabilities
  Credit receivables                                           205 674        211 947
  Deferred income                                               4 950          3 968
  TOTAL for Section V                                          210 624        215 915
  BALANCE                                                      427 745        541 827




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JSC "Tvel" profit and loss account as of the year 2001

                                                                           Thousands US$
  Description                                              Reporting period Corresponding
                                                                             period of the
                                                                             previous year
  Services, operations, products sales proceeds (net) (let     590 360            518 427
  VAT, excise taxes and similar compulsory payments)
  Cost of services, operations, products, good sold            370 155            352 067
  Gross profit                                                 220 205            166 361
  Commercial expenditures                                        5 695              6 339
  General and administration expenditures                         118                653
  Sales profit (losses)                                        214 392            159 369
  Interest received                                                29                 14
  Interest payable                                               7 387              3 147
  Other organizations                                             558                177
  Other operating profit                                           35                1,5
  Other operating expenditures                                  10 629              6 672
  Other profit (not connected with sales)                         631                279
  Other expenditures (not connected with sales)                  3 813             10 540
  Profit (losses) pretax                                       193 816            139 484
  Income tax and other corresponding compulsory                 65 297             47 915
  payments
  Routine activities profit (loss)                             128 519             91 569
  Net profit (reporting period retained profit (loss))         128 519             91 569

JSC “Tvel” financial report was signed by:
JSC “Tvel” President A.N. Nyago;
JSC “Tvel” Chief accountant V.M. Medvedev.


The reliability of accounting report for FY 2001 is proved by the audit company Joint stock
company “Group of business support” (license for the performance of audit activity No. 008198
issued by the RF Ministry of finance on 25.06.2001).

Analysis of financial indicators:

On the total, FY 2001 was characterized by a significant growth of the company's financial and
economic results. The overall volume of produce had increased by 28.4% against the previous
year. The proceeds of JSC “Tvel” had increased by 13.9%. The balance and net profits are higher
than the corresponding indicators for FY 2001 by 39% and 40.3% correspondingly. The volume
of export had increased by 20.1%.




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Contest of top 100 Russian exporter enterprises (2001)

According to the polls of the Top-100 contest conducted in the course of several past years by
Russian Expert Ratings Agency in cooperation with DHL International Ltd., JSC “Tvel” was
rated among the 20 top Russian exporter companies for 2001.

This result has been displayed by JSC “Tvel” for the three consecutive years. Fragments from the
poll are given in Table A3.1.

Comments to Table A3.1:

(1) JSC “Techsnabexport” and JSC “Atomstroyexport”, which are intermediary trade companies,
were not included in the participants list.

(2) Among the top 20 Russian companies-winners, JSC “Tvel” appears the only company to and
export industrial commodities rather than energy carriers or processed raw materials.




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  Table A3.1. Summary data for the 2001 competition of Russian exporter companies (excerpt)

                                                                                     Volume of annual                     Number
                                                                                                                 Number
                                                                                      exports (million   Export           of
Position   Position                                                                                                 of
                        Company's name          Category of industry        Region         US$)        increment          importer
in 2001    in 2000                                                                                               supplies
                                                                                                          (%)             countries
                                                                                      2001      2000             in 2001
                                                                                                                          in 2001
   1          1       "Gazprom"*              Oil, oil and gas industry              16400.0 13900.0     17.99     1932       27
  18         22       "SUAL Holding"*         Non-ferrous metallurgy                  575.3     506.4    13.61     6112       40
  19         20       JSC “Tvel”*             Machine building                        538.0    458.0     17.47     237        23

  20         23       "Yevrazholding"*        Ferrous metallurgy                      505.5    470.8     7.36      8450       42

  * - Holding companies, data consolidated for all enterprises of the holding




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A3.9. PLANS & PROSPECTS

JSC “Tvel”‟s long-term strategy pays a significant attention to both: expansion of export
operations at the traditional markets, and promotion to the new markets:

(1) One of the priority trends for JSC “Tvel” is further development of cooperation with former
Soviet union countries;

   To improve the situation in this field JSC “Tvel” broadens the cooperation with enterprises of
    the Ukraine and Kazakhstan. The goal of this cooperation is to develop strategic partnership
    for the production and sales of nuclear fuel and its components;

    Project of the Ukrainian-Kazakhstan-Russian joint venture on the production of nuclear fuel
    was approved in 1996, after JSC “Tvel” had won a relevant tender at the Ukraine. Closed-
    type joint stock company “ Ukrainian-Kazakhstan-Russian joint venture on the production of
    nuclear fuel” was registered on October 29, 2001 with a charter capital of US$ 450 million.
    The founders of this joint venture (in equal shares) were the Ukrainian fund of state-owned
    property, Russian JSC “Tvel”, and National nuclear company “Kazatomprom”. It is assumed
    that the activities of this joint venture at initial stage would be limited to the coordination of
    activities of incorporated enterprises, while its full-scale operations would start no earlier than
    by 2005;

    From the Ukrainian side, the venture would incorporate two enterprises of the
    Dnepropetrovsk region: “Zirconii” (Dneprodzerzhinsk) and, partially, Eastern mining and
    enrichment combinate (Zheltiye Vody). Russia‟s participation in technological cycle would
    include uranium enrichment and fuel assembly production at “Novosibirsk chemical
    concentrates plant” or at “Mashinostroitelny zavod” in Electrostal. The production of uranium
    pellets would be carried out by the Kazakhstan-owned “Ulbinsky metallurgical plant” – the
    largest in former Soviet Union manufacturer of nuclear fuel for NPPs. “Ulbinsky
    metallurgical plant” is incorporated into “Kazatomprom”;

(2) JSC “Tvel has plans to expand its presence at the market of fuel supplies to Eastern European
countries;

   JSC “Tvel” will supply fresh nuclear fuel to Czech NPPs in the course of next five years. The
    agreements on fuel supplies were reached in the course of negotiations held between the RF
    Minister for atomic energy A.Yu. Rumyantsev and Deputy chairman of Czech government,
    Minister of the Czech Republic for industry and transport Milovan Gregor. On April 16, 2002
    the parties have signed a corresponding memorandum;

(3) Efforts are undertaken to broaden the presence and expand the scope of JSC “Tvel”
operations in the markets of Western Europe (which were not so long ago totally closed for
Russian enterprises);

   Negotiations are being held with the top management of AREVA and
    BNFL/Westinghouse/ABB on the possibility of realization of a joint program for the supplies
    of Russian nuclear fuel to Western European power reactors;

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   Proposals are made to raise the quantity of disposable HEU liberated from nuclear arsenals. In
    addition to the existing arrangements, it is proposed that shipments of low enriched uranium
    (LEU) produced from HEU to the US and other countries are to be increased by means of fuel
    leasing, whereby actual fuel rather than uranium hexafluoride would be shipped to the US
    nuclear power plants on condition that relevant spent fuel would be returned;

(4) JSC “Tvel” plans to plans to promote to the new markets to sell its fuel;

   Signed is a contract for the supplies of nuclear fuel to China's Lyanyungun NPP which also
    provides for a transfer of the fabrication technology. Along with this, carried out would be the
    supplies of fuel for a Chinese fast neutron research reactor;

   In conformity with the bilateral agreement on the construction of the “Kudankulam” NPP
    with VVER-1000 reactors in India JSC “Tvel” would supply fuel and the equipment for these
    reactors;

   JSC “Tvel” carries out preliminary examination of the Bushehr NPP construction project with
    the goal to study an option for signing a contract for fuel supplies;

Comment:

The issue of Bushehr NPP construction and Russian fuel supplies to it remains a crucial one for
normalizing the U.S.-Russian nuclear partnership. Several important joint U.S.-Russian programs
have been suspended because of the U.S. State Department concerns about the proliferation
aspect of the Russian-Iranian deal. One point of concern here is the so-called 'bottom line', i.e.,
how many plants on the total Russia is planning to build in Iran. Another, not less important one,
is what would be the conditions for Russian fuel supplies contract. U.S. administration sticks to
the point that overall number of Russian NPPs in Iran should not exceed two, while fuel leasing
with repatriation of relevant spent fuel is the only acceptable option for Russian fuel supplies. In
July this year Russia had announced about its plans to build 5 new NPPs in Iran, which caused a
shock in the U.S. and resulted in suspension of several joint projects (like Russia joining
Generation-IV, etc.). As comes to the conditions Russian fuel supplies, the point responsible for
major U.S. concerns is that the original contract on Bushehr NPP construction included the words
about Russia supplying fuel to it with no mention of fuel leasing or spent fuel repatriation.
Russian officials now accept it was done by mistake and now and then confirm fuel leasing to be
the only option, but, as long as actual contract on fuel supplies is not signed, the U.S. concerns
are likely to remain in place. Moreover, Iranians have apparently learned of the issue and are now
trying to benefit from it commercially;

(5) JSC “Tvel” plans include further development of investment activity in the form of equipment
leasing to incorporated enterprises

   Program of leasing development to the benefit of Russian nuclear fuel cycle enterprises for
    the period of up to 2005 include:
     Formation of the portfolio of JSC “Tvel‟‟‟s investment and leasing projects for the period
        of up to 2005 as to be accomplished in order to be submitted to the investment contest and

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        exhibitions of the RF Ministry of economic development and trade, and also directly to
        potential investors;
        Preparation and signing of the agreements of financial leasing for the equipment that
        ensures the quality and competitiveness of the enterprises' produce;
        Co-jointly with Russian association of leasing companies, other organizations concerned,
        State Duma and Federation Council committees – participation in working out the
        legislative and regulatory base for further development of leasing in Russia.

Being an integrated joint stock company in the field of nuclear fuel cycle in Russia, JSC “Tvel”
naturally pursues an even higher degree of integration. An example for JSC “Tvel” might be
provided by super-large integrated Western groups like AREVA or BNFL/Westinghouse/ABB
which include not only the full spectrum of nuclear fuel cycle enterprises, but also enterprises for
the production of all reactor facility components, as well as those for NPP construction, D&D,
and environmental remediation.

As of today, JSC “Tvel” faces a tight competition at Western markets from the side of such
makers as AREVA or BNFL/Westinghouse/ABB. Hence, a very important task for JSC “Tvel” is
to develop a long-term development strategy for the company, to search for reliable long-term
partners, and to promote to the new markets. Probably, JSC “Tvel” would try to promote to those
world nuclear fuel markets where the competition is still not too tight (India, China). Another,
more probable option is that JSC “Tvel” would try to establish a long-term mutually beneficial
partnership with a certain foreign maker, for example, with BNFL/Westinghouse/ABB.


A3.10. KEY EVENTS OVER THE PAST YEAR

Listed below are the key events associated with JSC “Tvel” (over the past year, in a reverse
chronological order). Particular comments are provided when appropriate.

   November, 2002
    JSC “Tvel” will conduct negotiations with the Polish institute of atomic energy

    Comment:

    On November, 11 Prime-minister of Russia M. Kasyanov issued an ordinance according to
    which JSC “Tvel” is authorized to conduct negotiations with the Polish institute of atomic
    energy on signing of a contract for the production and supply of high-enrichment nuclear fuel
    to “Maria” research reactor located in the town of Sverk. The supplies might take place in
    2002-2003.
    Minatom RF was charged with an obligation to execute control over JSC “Tvel” during the
    negotiations and contract signing. Controlled would be the observance of Non-Proliferation
    Treaty and of the Guidelines of Nuclear Suppliers Group. In addition to this, Minatom RF and
    JSC “Tvel” were charged to execute the settlement of issues related to legal protection of the
    results of intellectual property to be used in the production of high-enrichment nuclear fuel.

   09.08.2002


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                                                                                           117
Russian experts are planning to load fuel in the first power unit of Iran's Bushehr nuclear
power plant, which is under construction with Russia's help, in December 2003, Russian
Deputy Atomic Energy Minister Andrei Malyshev said. Mr. Malyshev also said the building
of the first unit of the Bushehr N-Plant plant had passed several checks, including that by the
International Atomic Energy Agency (IAEA), and no violations of international agreements
have been revealed.




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                                                                                              118

   10-13.07.2002.
    JSC “Tvel” representatives have performed negotiations with the top management of
    Kazakhstan‟s National atomic company “Kazatomprom” on the creation of a joint venture for
    uranium mining at Kazakhstan territory.

   30.07.2002
    JSC “Tvel” accepted the proposal of Alpha-bank on the dissolution of an agreement on sales
    of the “Konversbank” shares.

    Comment:

    This decision was imposed by a long-delayed procedure of deal formalization. 18.35% of
    “Konversbank” shares formerly owned by JSC “Tvel” would be sold to another buyer.

   26.06.2002 г.
    An annual shareholders meeting of JSC “Tvel” was held.

    Comment:

    This meeting was several times postponed and took place only after the packet of documents
    prepared for it was approved by the RF Government. According to the RF Government
    decision, meetings of the board of directors and shareholders meetings of the state-owned or
    partially state-owned companies shall be conducted only after the plans of these meetings are
    coordinated with the RF Government.

   25.06.2002
    A delegation from BNFL/Westinghouse/ABB has visited JSC “Tvel”. JSC “Tvel” President
    Aleksandr Nyago and vice-presidents of JSC “Tvel” had discussed with their foreign
    colleagues a series of issues related to the production of nuclear fuel, and also an option to
    realize a joint program on the supplies of Russian nuclear fuel to the reactors of Western
    Europe.

   19.06.2002
    JSC “Tvel” was one of the sponsors of the VI Petersburg economic forum which opened on
    June 18, 2002.

    Comment:

    JSC “Tvel” president Aleksandr Nyago and director general of the Czech power company
    “ČEZ a. s.” Jaroslav Mil had signed a Protocol on the supplies of Russian nuclear fuel to
    Czechia in 2002-2006. Chairman of the RF Federation council Sergei Mironov and Prime-
    minister of the Czech Republic Milosh Zeman were present at the signing ceremony. Part of
    the supplies would be carried out to pay off the RF debt to Czech Republic. The supplies with
    overall amount of US$ 200 million are planned.

   17.06.2002

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                                                                                              119
    According to the polls of the Top-100 contest conducted in the course of several past years by
    Russian Expert Ratings Agency in cooperation with DHL International Ltd., JSC “Tvel” was
    rated 19 among the top Russian exporter companies for 2001. The rating and analytical
    materials are published in Russian “Expert” magazine No. 23 as of June 17, 2002.

    Comment:

    For details visit: http://www.export100.ru

   12.06.2002
    JSC “Tvel” President Aleksandr Nyago was rated 45th in the poll conducted by Russian
    weekly “Dengy” (“Money”) and called “Top-100: Leading persons of Russian business as
    judged by the volume of the controlled assets”.

    Comment:

    The full list of participants of the rating project “Who controls Russian finances” – 100
    managers and businessmen who control the finances of bigger Russian companies (the data as
    of early 2002) – was published in Russian weekly “Dengy” No. 22 of June 12, 2002.

   Early June 2002
    Russia and Bulgaria have finalized the settlement of mutual financial claims. To pay off the
    former Soviet Union debt to Bulgaria, JSC “Tvel” would supply nuclear fuel to the Bulgarian
    “Kozloduy” NPP.

   24.04.2002
    JSC “Tvel”‟s board of directors meeting was held at which the company‟s results for 2001
    were summed up. The board of directors accepted the report of JSC “Tvel” President
    Aleksandr Nyago that summarized the economic and financial records of the company. In
    addition to this, considered and approved were proposals on the amount, the terms , and the
    form of dividend payment for year 2001, on the distribution of profit, and on the agenda of a
    scheduled annual shareholders meeting.

   16.04.2002
    An agreement was reached that JSC “Tvel” enterprises would supply fresh nuclear fuel to the
    NPPs in Czechia over the 5 following years. A corresponding bilateral Memorandum was
    signed.

   April 2002
    A JSC “Tvel”-owned share holding of “Konversbank” was sold. 18.35% of the
    “Konversbank” shares were sold to the Alpha-bank. The decision on selling was adopted by
    JSC “Tvel”‟s board of directors.

    Comment:

    This decision was facilitated by the RF Government ordinance of February 2002, which
    prescribed the termination of state participation in the capital of commercial banks.

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   29.03.2002
    JSC “Tvel” is authorized by the RF Government to make deals on the import of spent nuclear
    fuel to Russia. The corresponding governmental ordinance was signed by the RF Prime-
    minister M. Kasyanov on March 29, 2002. The scope of deals is, however, limited to the
    imports of spent fuel from foreign NPPs to which fresh fuel had been previously leased.




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