Russia Slows Work at Iranian Reactor

Russia slows work at Iranian reactor
By Andrew E. Kramer -- Published: February 19, 2007

MOSCOW: Russia said Monday it would slow work on Iran's nearly completed Bushehr nuclear power plant after Iran was late in making its $25 million monthly payments.

The strange commercial dustup between Russia and Iran added a new twist to the deeply contentious project to build a Russian-designed, water cooled reactor in Iran, a decade-old deal that is close to the center of Washington's concerns over Iranian nuclear ambitions.

The dispute that became public Monday will delay, perhaps by a year, any delivery of nuclear fuel to Iran, Russian officials and experts said. Low-enriched uranium rods for a reactor core were scheduled to be shipped next month.

Iranian officials denied Monday that they had been late in making payments, IRNA, the official Iranian press agency reported, according to Reuters.

"So far the payments have been accomplished according to the contract," Mohammad Saeedi, the deputy head of Iran's Atomic Energy Organization, said, according to IRNA.

Russia's stringent commercial demands came just two days before a United Nations ultimatum to halt uranium enrichment was to expire Wednesday. They were also in keeping with a Kremlin policy of pumping up the bottom line across the spectrum of state businesses, which range from oil and gas to nuclear power.

"The accounts are not being paid." Ivan Dybov, spokesman for Rosatom, the Russian nuclear agency, said in a telephone interview. "We confirm that there are financial problems."

At issue, he said, was a request last month from the Iranian bank that settles accounts to pay in euros rather than dollars, he said.

It was not clear whether Iran's current account difficulties sprung from United Nations sanctions on Iran's nuclear industry introduced Dec. 23, or a parallel U.S. effort to persuade European banks to freeze dollar-denominated accounts held by Iranian citizens, analysts said. Also, independent of these restrictions, the Iranian government has a stated policy of settling oil and other large contracts and holding state reserves in currencies other than the dollar.

Russia has refused payment in euros, Dybov said. The Iranian central bank settled less than 25 percent of the dollar-denominated bill in January and missed the February payment entirely, he said.

"We aren't turning down the euros," on principle, Dybov said, but any change in terms must be incorporated in an amendment to the Bushehr contract, he said. Both the payment conditions and the exact shortfall are commercial secrets, he said.

Also, safety equipment that was to be delivered to Iran from an unspecified third country will not arrive on time, further delaying the project's inauguration, Dybov said. The plant was scheduled to be initiated in October and connected to the Iranian power grid in November.

The Interfax news agency cited Andrei Cherkasenko, a member of the board of Atompromresursy, another state company in the nuclear industry, saying Bushehr could not be inaugurated until mid 2008. Dybov declined to comment on when the plant might be brought online.
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