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Jordan Atomic Energy Commission

Developing the Project Development Agreement

Kamal J. Araj


Technical Meeting on Topical Issues in the Development of Nuclear Power

Infrastructure 3-6 February 2015

1


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’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.


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.


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.


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.


Owner/ Operator

Company JNPC JAEC

Government of Jordan

EMRC

Project Implementation


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’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.


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


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


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).


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.


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.


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.


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.


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).


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.


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.


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.

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