Brazil Postpones Decision on Completion of Angra 3 Nuclear Project

Brazil’s CNPE has deferred the decision on Angra 3 construction resumption due to governance issues at Eletronuclear. The project, originally initiated in 1984, has faced multiple suspensions tied to corruption and financial challenges. A recent feasibility study indicated high costs for both completion and abandonment of the project, highlighting its strategic significance amid an evolving energy landscape in Brazil.

In a recent meeting, Brazil’s National Energy Policy Council (CNPE), associated with the Ministry of Mines and Energy, announced a delay in the decision regarding the resumption of construction for the third unit of the Angra Nuclear Power Plant (NPP). Currently, Angra NPP operates two pressurized water reactors: Angra 1, with a capacity of 640 MWe, operational since 1985, and Angra 2, with a capacity of 1,350 MWe, which began in 2001.

Construction on Angra 3 began in 1984 but was halted after two years. Despite a revival in 2006 and the commencement of concrete pouring in 2010, the project faced suspension in 2015 due to corruption allegations. At that juncture, the project was 65% finished. Although Eletronuclear reinitiated construction orders in 2022, a halt was enforced again in April 2023 by the local government of Angra dos Reis, citing several concerns, including payment issues.

To improve its financial and managerial conditions, Eletronuclear, part of the national electricity group Eletrobras, implemented strategic measures earlier this year. Minister of Mines and Energy Alexandre Silveira acknowledged the nuclear sector’s significance for Brazil while stressing the need for Eletronuclear to demonstrate effective governance before proceeding with Angra 3.

A feasibility study conducted by the National Bank for Economic and Social Development (BNDES) in 2019 concluded that abandoning Angra 3 could incur costs exceeding BRL21 billion, as opposed to BRL23 billion required for its completion. The plant is tentatively scheduled to operate commercially by 2031, recognizing that certain parts of Angra 3 equipment had already been appropriated for Angra 2.

Industry experts assert the strategic importance of Angra 3 due to growing intermittent renewable energy sources in Brazil’s electricity matrix. However, Eletronuclear faces substantial financial challenges, including approximately BRL7 billion in debts and an annual operating cost of BRL800 million, complicating its ability to secure funding for the project.

Minister Silveira outlined that not finalizing Angra 3 would incur immediate costs totaling BRL14 billion and impair Eletronuclear’s capacity to maintain operations at Angra 1 and 2 due to insufficient resources for fuel procurement. ENBPar, the state-owned entity responsible for overseeing nuclear initiatives, might need to account for losses related to plant asset devaluations, which could augment the total expenses associated with Angra 3.

After the CNPE meeting, discussions ensued between Eletrobras and the Federal Government, resulting in a conciliation agreement that clarified the government’s role post-privatization. This agreement is poised to resolve ongoing lawsuits and has implications for the financing and future of Angra 3 amid the life extension discussions for Angra 1.

As part of the agreement, Eletrobras will maintain certain guarantees while an investment deal tied to Eletronuclear, particularly for Angra 3 financing, will see immediate suspension. A fresh mediation process will be established, presenting a new framework for completing Angra 3, while Eletronuclear plans to issue BRL2.4 billion in debentures to fund life extension for Angra 1.

Despite the cessation of financial obligations for Angra 3, feasibility assessments will persist, facilitating the possibility of a new study by BNDES aimed at ensuring economic viability. The agreement mandates that the Angra 3 project’s financing be feasible under market conditions while adhering to established privatization principles.

The CNPE’s decision to postpone the completion of Angra 3 reflects broader governance and financial challenges faced by Eletronuclear and Eletrobras. With significant costs anticipated should the project pause, and an emphasis on securing transparent, effective management, the future of Angra 3 remains uncertain. Ongoing feasibility studies and strategic negotiations signal the complexities involved in advancing Brazil’s nuclear energy strategy.

Original Source: www.neimagazine.com