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May 22, 2022

Fondul Proprietatea says Nuclearelectrica’s project to build units 3 and 4, unfeasible

Fondul Proprietatea (FP) considers that the project to build units 3 and 4 at the Cernavoda nuclear-power plant is not feasible and could be value destructive for Nuclearelectrica’s shareholders if continued, given the current electricity market context, as well as longer term forecasts, Fondul Proprietatea said Thursday in a press statement.

” According to the latest public statements made by officials from the Ministry of Energy, this project may recover its investment value only at an energy price of EUR 82/MWh, while the current OPCOM wholesale energy price is much lower, i.e. EUR 35-40/MWh. This price discrepancy clearly shows that the project is not feasible,” the statement reads.

On the other hand, FP argues the decision of the Ministry of Energy to vote against the proposal it made in the General Shareholders Meeting of Nuclearelectrica held on October 17 to commission the Board of Directors of Nuclearelectrica to draft a report related to the costs incurred by the company so far for the project related to units 3 and 4, sets a dangerous precedent.

” The project to build Reactors 3 and 4 generates massive costs for Nuclearelectrica, thus negatively influencing the profits of the company and shareholders are entitled to access information on the expenditures incurred so far for this project,” Greg Konieczny, CEO of Franklin Templeton Investment Management Limited UK Bucharest Branch and Portfolio Manager of Fondul Proprietatea is quoted as saying in the statement.

He also mentioned that since Nuclearelectrica is listed on the stock exchange, the Ministry of Energy should observe even more rigorously transparency and reporting requirements to the benefit of the company and all its shareholders.

Late this October, coordinator of Romania’s 2016-2030 Energy Strategy project Radu Dudau said nuclear power should cost 82 euros per MWh for units 3 and 4 to be profitable. But data with the energy stock exchange show September 2016 next-day market prices were 35 euros per MWh on the average. Dudau argued that the contract for covering the difference is not some state-aid scheme, but a mechanism that guarantees consistency of revenue for the investor.

Nuclearelectrica Director General Daniela Lulache said in her turn that the price is the subject of negotiations with an investor that had displayed interest in units 3 and 4 of the Cernavoda nuclear power plant. Lulache has told Agerpres recently that negotiations with China’s CGN over units 3 and 4 reached the finish line, and that left to settle is the part of the Romanian Government in the project.

On the other hand, Energy Minister Victor Grigorescu has said the project for building units 3 and 4 of the Cernavoda nuclear-power plant will be included in the energy strategy of Romania because more than one billion euros are already invested in the project.

On November 9, 2015, Nuclearelectrica and China General Nuclear Power Corporation (CGN) signed a memorandum of understanding on the development, construction, operation and decommissioning of units 3 and 4 of the Cernavoda nuclear-power plant.

Launched in December 2005, the Fund was established to compensate Romanians whose properties were confiscated by the former communist government. An international tender was announced in December 2008, and Franklin Templeton officially took over as investment manager and sole administrator of the Fund on 29 September 2010. The Fund is an alternative investment fund and its investment objective is the maximization of returns and per-share capital appreciation via investments mainly in Romanian equities and equity-linked securities. The Fund has been trading on the Bucharest Stock Exchange since 25 January 2011 and has been listed on the Specialist Fund Market of the London Stock Exchange by means of global depositary receipts (“GDRs’) on 29 April 2015.

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