Jordan Atomic Energy Commission
Developing the Project Development Agreement
Kamal J. Araj
Jordan Atomic Energy Commission
Technical Meeting on Topical Issues in the Development of Nuclear Power
Infrastructure 3-6 February 2015
1
Jordan Atomic Energy Commission
NPP Technology Selection
JAEC has been mandated to implement the Nuclear Energy
Strategy including the selection of plant vendor and Investor/
Operator for Jordan.
JAEC elected to arrive at a design/vendor selection process for
construction of the first nuclear power plant through an
Engineering, Procurement and Construction (EPC) contract.
Jordan Atomic Energy Commission
Jordan’s Challenges
Newcomer country.
Lack of nuclear experience.
Lack of nuclear infrastructure.
Lack of nuclear operating experience.
Legal & regulatory framework.
Limited of financial resources.
Fuel supply security.
Jordan Atomic Energy Commission
Integrated Approach
ASE as the EPC contractor.
Rusatom Overseas as a strategic partner.
Rosatom (Affiliate) as an operator.
Rosatom (Affiliate) as an Fuel Supplier / Fuel Management
Regulatory cooperation between Jordan and Russian
Federation.
Jordan Atomic Energy Commission
GoJ Cabinet Decision (Aug. 25, 2013)
To adopt Nuclear Energy as one of the alternatives to producing
electricity in the overall energy mix in Jordan.
To establish a company that is fully owned by the Government to
Manage the Project.
To select Amra site as the preferred site and carry out site
characterization for the construction of the JNPP.
Jordan Atomic Energy Commission
GoJ Cabinet Decision (Oct. 27, 2013)
To select Rosatom as the Preferred Bidder based upon the
Integrated approach consisting of ASE as the EPC contractor and
Rusatom Overseas as the strategic partner (Investor/Operator).
To implement the project through the 2 phase approach.
To keep all financing options open for the project.
To designate JAEC to negotiate with the Russian side the
implementation of the Project.
Jordan Atomic Energy Commission
Owner/ Operator
Company JNPC JAEC
Government of Jordan
EMRC
Project Implementation
Jordan Atomic Energy Commission
Delivering a Financeable Project Structure
Schedule Risk - Two project phases:
Phase 1- Project Development Phase
Phase 2- Project Implementation Phase
Construction Risk - EPC contract with major vendor
Political Risk - Direct Government of Jordan investment in the project
Fuel Risk - Secure fuel supply agreement
Market Risk - Long term Power Purchase Agreement (PPA) & Loan Guarantees
Operating Risk - Strong International Operator
Nuclear Risk - International treaties, decommissioning and spent nuclear fuel policy
Jordan Atomic Energy Commission
Jordan’s Nuclear Power Plant Project
Two Pressurized Water Reactors (PWR).
Generation III+ (Russian VVER-1000 design (AES-92)).
Net-Output: 2 X 1000 MWe.
Commercial Operation: 2023-2025.
Lifetime: 60 years.
Development, Construction, Operation, Spent Fuel Management, and
Decommissioning.
Jordan Atomic Energy Commission
Contractual Structure
JNPC ROSATOM NEPCO
Gov. of Jordan Other Investors (Local & Foreign)
Project Company
ROSATOM/Operator
EPC Contractor/ASE
PPA
EPC Contract
SHA
SHA
50-% 50+%
O&M Agreement Fuel Supply Agreement
Jordan Atomic Energy Commission
LICENSE
JNPP Project Stakeholder Structure
Project Company Regulator JNRC/ERC
NEPCO (Elec. Off-taker)
ROSATOM Overseas
Jordan Nuclear Power Company
EQUITY EQUITY
PPA
PERMITS
EPC Contractor
EPC Contract
Lenders
DEB
T F
IN
AN
CIN
G
Fuel Supply/ Management
Water Agreements
Strategic Investor
Government Of Jordan
Water Supply MOWI/SWP
Fuel Agreements
Operation and Maintenance
O&M Agreements
Jordan Atomic Energy Commission
Project Phases
Phase I: Pre-Investment Phase (Development Phase)
1. Conducting the required Site Characterization,
Environmental Impact Assessment, Grid Study,
Electricity Market Study, Offsite Infrastructure and Water
& Cooling Study for the Site/Project.
2. Preparing and finalizing the Bankable Feasibility Study
with the Investor/Operator and Investors for the project
along with other all required studies.
3. Securing the Financing for the project and Finalizing all
Phase II related Project Agreements.
Phase II: Investment Phase (Implementation &
Construction Phase).
Jordan Atomic Energy Commission
Project Development Agreement (PDA)
• The PDA is a project level agreement that defines the activities and responsibilities required by both parties in the Pre-investment phase – Phase I.
• The aim of the PDA is to develop the project to whereby all investment criteria are met and a (positive) Final Investment Decision can be made.
• Activities included in this Phase under the PDA: Site Characterization, Environmental Impact Assessment, Off-Site Infrastructure Studies, Water Requirements, Securing of Financing and Preparation of the Bankable Feasibility Study.
• Following this, and as part of the Pre-Investment Phase, project agreements (PPA, EPC, O&M, SPA, SHA, FSA) will be negotiated and signed to proceed with phase II (project implementation and construction phase).
• The PDA has been approved by the Cabinet of Ministers of Jordan and signed by JAEC and RAOS on September 22nd, 2014.
Jordan Atomic Energy Commission
Agreements/Contracts to be concluded to move to Phase II:
EPC Contract;
Power Purchase Agreement;
Water Supply Agreement;
Fuel Supply Agreement;
Shareholder’s Agreement
Share Purchase Agreement
Spent Fuel Terms Sheet and
Operation and Maintenance Terms sheet.
Jordan Atomic Energy Commission
Studies to be conducted in Phase I:
Site Characterization and Environmental Impact Assessment;
Grid Study;
Electricity Market Report;
Water Supply and Demand Study;
Offsite Infrastructure Study; and
Updated Bankable Feasibility Study.
Based on the aforementioned studies and Outcome of the Bankable
Feasibility Study, an investment decision will be made to proceed to
Phase II (Implementation & Construction Phase) based on the
Investment Decision Criteria.
Jordan Atomic Energy Commission
Investment Decision Criteria (Gov. of Jordan):
IRR % per annum(nominal USD);
Average Electricity sale price from the plant to the Grid shall
not exceed x per KWh (in US Dollar Cents in 2014 money
values);
The specific investment cost shall not exceed xx per net
installed KWe (in US Dollars in 2014 money values);
Irrevocable equity commitment guaranteed by a guarantor
acceptable to the Government of Jordan.
Jordan Atomic Energy Commission
Investment Decision Criteria (Rusatom Overseas):
Confirmation of Site Selection;
Site Permit Issued by EMRC;
Equity Commitment guarantee by the Government of Jordan
or another guarantor acceptable to Rosatom Group;
Water Supply to Site Parameter;
Electricity Offtake agreement;
Nuclear Infrastructure availability and further development;
Offsite infrastructure availability and further development;
Comfort lenders from potential lenders for financing;
Equity contribution of at least 30% from each shareholder;
IRR of x% per annum(nominal USD).
Jordan Atomic Energy Commission
Intergovernmental Agreement (IGA)
• The IGA is a Government level agreement that lays the framework and understanding in relation to the cooperation on the implementation of the Project between the Government of the Jordan and the Russian Federation;
• Several rounds of negotiations have been conducted. The IGA is currently being finalized;
• The IGA will be presented for Cabinet approval and will be ratified by the Parliaments of both Jordan and Russia;
• The longevity of the project along with the particularities of Nuclear Power Plants deem the necessity for an IGA.
Jordan Atomic Energy Commission
Project Guarantees Government of Jordan:
Project Security;
Site Availability;
Water Supply;
Legal Framework Development;
Tax exemptions;
Power Purchase Agreement:
Long Term (up to Project’s lifetime);
100% of NPP output;
Take or Pay.
Project Company:
Project Construction;
Project Operation;
Decommissioning;
Spent Fuel Management.
Government of Russia:
Fuel Supply;
Spent Fuel return to Russia (optional);
HRD.
Jordan Atomic Energy Commission
Conclusion and Findings • Replicating the experience of developing a Nuclear Power Plant in a
different country (both technical and economical/financial) requires a lot o hard work. Replicating it in a Newcomer country is very difficult.
• The hurdles facing Newcomer countries, and especially those with limited resources, and the amount of work required, make proper planning, management of both resources and time, and most important, risk, a key factor to the success of the project. The amount of work required as a foundation for developing a Nuclear Power Plant is quite extensive.
• To overcome some of the complexities, JAEC has opted for the integrated approach (partnering with a vendor/operator with extensive knowhow) in this early stage, and coupled that with a two phased development (finish all the preparatory work including all required studies and agreements), then begin implementation and construction.
• This approach, in our opinion, minimizes some of the risks faced by Newcomer countries.