WASHINGTON (AP)--A U.S. company that sells nuclear fuel taken from old
Soviet weapons is at loggerheads with Russian negotiators over the purchase
price.
The dispute has some Bush administration officials worried about the future
of the "megatons to megawatts" program that serves the dual purpose of keeping
nuclear weapons away from terrorists and supplying fuel to commercial U.S.
reactors.
The latest round of talks between USEC Inc. (USU) of Bethesda, Md., and its
Russian counterpart, Tenex, ended Friday in Moscow without a deal.
USEC executives say the negotiations are progressing normally, and there's
no threat to the U.S. government-backed program. But Russian officials have
grown impatient and asked the Bush administration to intervene.
USEC is a former government entity that was privatized in 1998. It is the
government-appointed middleman that buys the Russian nuclear fuel and sells it
to U.S. utilities. The recycled fuel accounts for about half the low-enriched
uranium used in the U.S.'s nuclear plants.
A five-year fixed pricing agreement between USEC and Tenex expired at the
end of last year. USEC says the fixed rate was too high. It wants a 10-year
agreement with a lower price that will fluctuate with the uranium market.
Gaining a lower price is key for USEC, which has seen its stock price drop
by about half in the last four years. The company made a $41 million profit in
the fiscal year that ended in June, but that was down more than 60% from the
previous year.
USEC operates the nation's only uranium enrichment plant, in Paducah, Ky.
Bush administration officials have said they want to ensure a domestic
supplier of enriched uranium exists, so USEC's financial viability is
important.
USEC's initial proposal to Tenex has changed little since it was offered in
May 2000, and Russian officials are growing impatient. The lack of progress
also has Bush administration officials worried.
In a Jan. 8 letter to USEC, Undersecretary of Energy Robert Card said he
fears "if the outstanding issues in the negotiation are not resolved
expeditiously, the United States could find itself with a nuclear power fuel
shortage."
In an unusually tart response, USEC President and CEO William Timbers
replied that such concerns are "unwarranted and disingenuous."
USEC hasn't placed an order with the Russians for the current year.
Normally, orders would have been placed in October for deliveries in March.
USEC spokesman Charles Yulish said Friday the company has an inventory of
low-enriched uranium, so U.S. power plants will not be left without a supply.
Russia's minister of atomic energy, Alexander Rumyantsev, sent Energy
Secretary Spencer Abraham a letter Jan. 15 recommending
government-to-government negotiations. Rumyantsev complained USEC was trying
to secure an artificially low price.
"USEC's proposals aim to create a price-setting mechanism, which would help
the company solve its financial difficulties at the expense of the Russian
party," Rumyantsev wrote.
Abraham turned down the request. Meantime, the U.S. ambassador to Russia,
Alexander Vershbow, sent Russia's finance minister a letter urging the Russian
government "to encourage Tenex to work to resolve the remaining differences,
which in our view do not lend themselves to resolution by governments."
National security analysts say they are troubled by the back and forth
because so much is at stake.
"This deal is critical to the future of international security. To see it
fail would be an enormous tragedy," said Bill Hoehn, a director at the Russian
American Nuclear Security Advisory Council, a nonprofit research organization.
Russia gets roughly $500 million annually from the megatons-to-megawatts
program, which has destroyed 5,600 warheads.
(END) DOW JONES NEWS 01-25-02 |
