US nuclear firms urge Ex-Im Bank renewal
30 July 2014
US nuclear power companies argue they will lose business to rivals from other countries, including Russia and China, if Congress decides against reauthorization of the Export-Import Bank.
Established by President Franklin D Roosevelt in 1934 Ex-Im Bank is the USA's official export credit agency. Its mission is to assist in financing the export of US goods and services to international markets.
"This is not a partisan issue. This is an American competitiveness issue," Westinghouse president and CEO Danny Roderick said. "From the energy industry perspective, Ex-Im is an absolute necessity in order to compete globally against state-funded and state-subsidized companies," Roderick said.
Roderick spoke at a meeting organised by the National Association of Manufacturers, in Pittsburgh on 25 July, to highlight the adverse effect on US firms of all sizes if Congress allows the bank's charter – and thus its financing powers - to expire on 30 September.
Roderick reiterated comments he made at the World Nuclear Association's Annual Symposium held in London last September, that Westinghouse had a long history of assisting its customers in securing financing from export credit agencies, including Ex-Im Bank. He criticised the build-own-operate model Russian Rosatom is marketing in its foreign business as being anti-competitive.
Ex-Im Bank supported Westinghouse's bid for the Temelin extension project in the Czech Republic. The US company competed for that contract against French Areva and a Czech-Russian consortium between Škoda JS, AtomStroyExport and OKB Gidropress. In April, Czech utility CEZ cancelled the procurement process.
Ukraine
Holtec International is seeking assistance from Ex-Im Bank "for a critical project" in Ukraine to design and build a central used fuel storage facility, the company's senior vice president, Pierre Paul Oneid, said at the same meeting. Without this facility, Ukraine would remain dependent on Russia to keep its nuclear reactors running, Oneid said. Ex-Im is a "valuable instrument" of US foreign policy of which the situation in Ukraine "is a textbook example," he said.
But House Financial Services Committee chairman Jeb Hensarling wrote to President Barack Obama last week to argue that the current crisis in Ukraine illustrates the need to shut down the bank.
"While your Administration announces sanctions on Russian companies on the one hand, on the other it offers sweetheart deals to Russian companies through Ex-Im," Hensarling wrote, citing loans to two state-owned Russian banks.
The government is seeking a five-year reauthorization and a gradual increase in the bank's lending cap, to $160 billion from the $140 billion limit set by the its latest reauthorization, in 2012.
Other opponents of Ex-Im Bank cite recent allegations of corruption at the bank in their criticism of its function, accusing it of crony capitalism and corporate welfare.
Political commentators say a decision on the future of Ex-Im Bank will remain unclear until September, since US lawmakers start a five-week recess on 1 August. But Darrell Issa, chairman of the House Oversight and Government Reform Committee, has said publicly that Ex-Im Bank may be granted a short-term extension to its charter on condition that changes are made to its operations – namely, in terms of its transparency and accountability.
Bidding requirement
The availability of export credit agency support is "almost always a bidding requirement" for nuclear power plant tenders, the Nuclear Energy Institute (NEI) said.
"Allowing Ex-Im Bank to expire would be tantamount to unilateral trade disarmament, conceding billions of dollars in orders to other supplier nations that maintain their own export credit agencies," NEI said in a statement.
NEI president and CEO Marv Fertel told a congressional hearing on 25 June that, when a US supplier wins a major nuclear power plant tender, "it establishes relationships that can endure for decades through the supply of fuel, equipment and services."
NEI has sought to debunk myths about Ex-Im Bank, such as that it is a risk to taxpayers. The bank transfers about $1 billion each year to the US Treasury’s general fund, its portfolio is diversified across a wide range of industry sectors, and its default rate is currently extremely low, NEI said.
Russia has rapidly expanded its share of the international nuclear energy market, "in large part due to aggressive export finance," NEI said. "Without Ex-Im Bank to maintain a level playing field against Russian finance, the United States will cede many transactions – and influence – to Russia," it said.
Hungary recently cited below-market interest rates for its award in January of a $13.5 billion contract for two new nuclear plants in its Paks upgrade project to Rosatom.
Not only Russia, but other leading nuclear energy supplier nations - such as France, Japan and South Korea - have provided their national nuclear energy suppliers with multiple forms of support, NEI said, including strong trade finance.
The NEI was one of 16 US trade associations to sign a letter to the US Senate dated 19 March that said delaying Ex-Im Bank reauthorization "would hurt US manufacturers of every size and sector."
According to the Organization for Economic Cooperation and Development, 60 official export credit agencies worldwide have extended more than $1 trillion in trade finance in recent years. Ex-Im Bank provided less than 4% of the global total of trade finance in 2012.
Researched and written
by World Nuclear News