VZCZCXRO2189
RR RUEHAST RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHTM
DE RUEHHI #0898/01 2170102
ZNR UUUUU ZZH
R 040102Z AUG 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 8247
INFO RUEHHM/AMCONSUL HO CHI MINH 4982
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC

UNCLAS SECTION 01 OF 04 HANOI 000898 
 
DEPT FOR T (JWOLCOTT, MHUMPHREY), ISN/NESS (ABURKART,PMCNERNEY), 
ISN/RA (RBEISECKER) AND EAP/MLS 
STATE PLEASE PASS TO NUCLEAR REGULATORY COMMISSION (KFOGGIE, 
JMCLELLAND-KERR) 
DEPT OF ENERGY FOR DOE/NE (EMCGINNIS, CWELLING), NNSA/NA-21 
(SFRAZER, KAPT, DKOVACIC, SDICKERSON, IBOLSHINSKY, SMOSES, 
ABIENIAWSKI) 
COMMERCE PLEASE PASS TO USTDA (DROSSITER) 
COMMERCE FOR ITA/MAC/HONG-PHONG PHO 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958:  N/A 
TAGS: ENRG ECON TRGY BEXP PARM KNNP VM
SUBJECT: VIETNAM NUCLEAR SECTOR MOVING FORWARD WITH U.S. SAFETY AND 
SECURITY ASSISTANCE 
 
HANOI 00000898  001.2 OF 004 
 
 
SENSITIVE BUT UNCLASSIFIED.  PLEASE PROTECT ACCORDINGLY. 
 
¶1. (SBU) Summary:  A high-level Department of Energy (DOE) 
delegation recently visited Vietnam to discuss the safe and secure 
development of the Vietnamese nuclear sector and Vietnamese entry 
into the Global Nuclear Energy Partnership (GNEP).  Vietnamese 
officials seemed quite interested in GNEP, but slow, consensus-based 
decision-making processes may delay Vietnam's immediate, active 
participation.  The delegation's meetings with different Government 
of Vietnam (GVN) entities with responsibility for development and 
regulation of the nuclear sector highlighted Vietnam's determination 
to develop civilian nuclear power and the important role the United 
States has played in furthering nuclear safety and security.  End 
summary. 
 
DOE Delegation Highlights GNEP Benefits 
--------------------------------------- 
 
¶2. (SBU) In meetings with GVN nuclear officials, DOE Office of 
Nuclear Energy Deputy Assistant Secretaries Ed McGinnis and Craig 
Welling previewed the soon-to-arrive invitation to the GVN from the 
21 current GNEP partner countries to join that organization.  The 
partners had unanimously decided to invite Vietnam and noted their 
enthusiasm for including Vietnam based on its serious consideration 
and responsible approach to the development of civilian nuclear 
energy.  McGinnis stressed that GNEP covers nuclear power from 
mining to final disposition of radioactive waste from spent fuel 
with the goal to ensure reliable and affordable commercial fuel 
supplies for a safe and secure civilian nuclear power sector.  GNEP 
was designed to complement, not replace the International Atomic 
Energy Agency (IAEA), which supports GNEP, and other international 
initiatives.  McGinnis emphasized that GNEP was a voluntary 
partnership of equals, which operated by consensus, not through the 
will of a few states with advanced nuclear capacities. 
 
Vietnam Interested in GNEP, but not Ready to Commit 
--------------------------------------------- ------ 
 
¶3. (SBU) High-level Vietnamese officials noted their strong interest 
in GNEP, with which they had become increasingly familiar. 
Ministry of Science and Technology (MOST) Vice Minister Tran Quoc 
Thang noted the close connection between ongoing GNEP discussions 
and GVN plans to conduct nuclear safety feasibility studies. 
Additionally, Vietnam was anxious to tap into GNEP resources to 
improve its infrastructure and human resources.  However, several 
interlocutors, including Thang, stated that the GVN would complete 
an in-depth review before making a final decision on whether to 
join.  Vietnam Atomic Energy Commission (VAEC) Vice-Chairman Le Van 
Hong reiterated Thang's comments and added that the GVN likely would 
seek additional information.  Dr. Ngo Dang Nhan, the Chairman of the 
Vietnam Agency for Radiation and Nuclear Safety & Control 
(VARANSAC), saw "the obvious benefits" to GNEP but mentioned 
concerns about possible Vietnamese obligations.  Additionally, as 
several GVN entities play important roles in developing Vietnamese 
nuclear policy (though Thang noted that Ministry of Industry and 
Trade (MOIT) would likely represent the GVN with GNEP), it may take 
a while for the GVN to reach internal consensus on how quickly to 
move forward on GNEP membership.  McGinnis acknowledged GVN comments 
and reiterated the voluntary nature of the organization, with no 
resource obligations - in fact, countries just beginning to develop 
their nuclear sectors would be in position to receive, not provide, 
resources. 
 
Who's Who in Vietnamese Nuclear Power Sector 
-------------------------------------------- 
 
¶4. (SBU) While MOIT and state-owned Electricity of Vietnam (EVN) 
have responsibility for investment in Vietnam's planned civilian 
nuclear power sector, MOST exercises oversight over Vietnam's 
nuclear program and serves as the designated regulator.  The VAEC, 
with a staff of 600, an administrative and scientific agency under 
MOST, advises MOST on nuclear policy and operates the Dalat research 
reactor.  VARANSAC was established in 2003 under MOST and assists 
the Minister in the state management of radiation and nuclear safety 
and control.  Its main roles include developing policies, programs, 
legal documents, regulations and standards on radiation and nuclear 
safety, licensing, regulatory inspections, environmental monitoring, 
emergency response, and safety assessment.  VARANSAC played a key 
 
HANOI 00000898  002.2 OF 004 
 
 
role in the drafting of Vietnam's new Atomic Energy Law.  At the 
same time, however, nuclear power's high profile and importance to 
energy security and economic development ensure that the Prime 
Minister's office will track, and perhaps direct, the progress of 
nuclear development.  In fact, despite VARANSAC's rapid growth and 
human resource and training upgrades, EVN noted its belief that a 
special task force headed by a deputy Prime Minister would supervise 
preparation for the nuclear sector, including the creation of the 
safety and security infrastructure. 
 
With U.S. Assistance, Vietnam Developing 
Nuclear Safety and Security Infrastructure 
------------------------------------------ 
 
¶5. (SBU) Vietnam's participation in the U.S.-sponsored GNEP would 
continue the trend of increasingly close cooperation between the two 
nations on nuclear nonproliferation and safety and security issues. 
Vietnamese officials recognize the value of U.S. assistance, with 
MOST Vice Minister Thang highlighting the 2007 joint U.S., 
Vietnamese, and Russian initiative to convert Dalat nuclear research 
reactor and return fresh highly enriched uranium to Russia.  In 
August 2007 the Department of Energy concluded a "Sister Lab" 
arrangement with MOST, pursuant to which DOE signed several "action 
sheets" with VAEC and VARANSAC detailing additional cooperation 
between Lawrence Livermore and Oak Ridge national laboratories and 
Vietnamese technical personnel on specific measures to promote 
nonproliferation and security objectives.  VARANSAC and VAEC praised 
the recent Memorandum of Understanding for the Exchange of Technical 
Information and Cooperation in Nuclear Safety Matters between 
VARANSAC and the U.S. Nuclear Regulatory Commission (NRC), signed 
during Prime Minister Dung's June visit to Washington D.C.  Both DOE 
and the NRC provided significant assistance to VARANSAC efforts to 
draft the new Atomic Energy Law, which recently passed the National 
Assembly.  Building upon these efforts, the United States and 
Vietnam have begun to negotiate to sign a broader MOU on nuclear 
cooperation, which may form the basis for an eventual Section 123 
Agreement, which would facilitate U.S. commercial nuclear exports to 
Vietnam.  EVN officials noted the upcoming U.S. Trade and 
Development Agency-sponsored orientation visit to the United States 
and wanted to ensure that their policymakers and technical experts 
had the opportunity to learn more about the U.S. civilian nuclear 
power sector. 
 
As Energy Demand Spikes, 
Vietnam to Increase Nuclear Energy Sources 
------------------------------------------ 
 
¶6. (SBU) Vietnamese energy sector experts increasingly point to 
nuclear energy to supplement Vietnam's limited domestic energy 
generation capacity.  Vietnam will soon run out of new sources of 
hydropower and by 2011 expects to begin importing coal.  Substantial 
offshore natural gas reserves may be blocked by political 
maneuvering over control of the South China Sea.  In 2006, the Prime 
Minister approved a strategy for the development of the nuclear 
power for civilian purposes (power and other applications) through 
¶2020.  Pursuant to the master plan approved by the Prime Minister, 
Vietnam intends to produce 10,000 megawatts from nuclear energy by 
¶2030.  Per VARANSAC, Vietnam hopes to generate 3.3 percent of its 
energy from nuclear power by 2020 and 4.7 percent by 2025. On June 
3, the National Assembly passed the Atomic Energy Law.  VARANSAC now 
is working to draft three government decrees to implement the law 
and to facilitate the growth of nuclear power.  Several 
interlocutors explained that a recent review of energy production 
and demand figures led the GVN to upgrade the importance of nuclear 
in Vietnam's planned energy mix.  Demonstrating this increasingly 
prominent role for nuclear power, at the same time that McGinnis and 
Welling visited Hanoi, the EVN Director General and VAEC chairman 
accompanied the Prime Minister to Ninh Thuan province south of Nha 
Trang to study a possible site for Vietnam's first reactors. 
 
Construction Timetable 
---------------------- 
 
¶7. (SBU) According to the timetable laid out by VARANSAC, Vietnam 
will break ground to construct its first two-reactor nuclear plant 
in 2013, after taking two years to finalize site location followed 
by a three year bidding process.  VARANSAC expects construction to 
last seven years, with an estimated completion date of 2020. 
 
HANOI 00000898  003.2 OF 004 
 
 
Vietnam plans to initially construct a 2,000 megawatts nuclear 
facility consisting of two reactor units of approximately 1,000 
megawatts each (note: per VARANSAC, this figure could vary slightly 
depending upon EVN negotiations with contractors), which would be 
integrated by an exclusive line into a 500 kv grid, which would then 
be integrated into the national grid.  VARANSAC stated that the 
first site at Phuc Dinh would be based next to the national grid. 
Aditional sites in Hoa Tam and Vinh Hai in Phu Yen province, to the 
north of Ninh Thuan, would be placed in rural areas far from 
population centers.  VARANSAC Chairman Ngo Dang Nhan stated his 
desire for one common design for the first several units to promote 
better nuclear safety, but acknowledged that political calculations 
would impact design decisions. 
 
Contracting Opportunities 
------------------------- 
 
¶8. (SBU) VAEC and EVN recently completed a pre-feasibility study for 
the construction of the initial two reactors, which was approved by 
the Ministry of Planning and Investment, and which they expect to 
submit to the National Assembly for approval early next year.  Once 
approved by the National Assembly, EVN will coordinate the tender 
process to draft a full feasibility study, which Nguyen Phu Gia, 
Deputy Director of the Project Approval Department at EVN, expected 
to issue in October or November of this year.  Subsequently, per 
Gia, all options for nuclear vendors and financing will be on the 
table and the GVN would decide upon what type of contractor and 
technology that it would use.  (Note: VARANSAC stated that the first 
plant would rely upon light water technology).  By March or April 
2010, EVN would tender the engineering, procurement, and 
construction (EPC) contract, with the bid listed in the Vietnam 
Economic Times and on the Ministry of Planning and Investment 
website.  EVN intended to contract with a contractor to build and 
operate the facility for a period of time before transferring the 
operations to EVN.  MOIT Vice Minister Do Huu Hao noted that while 
EVN would be the sole investor in the first two nuclear reactors, 
Vietnam might open up subsequent facilities to foreign investment, 
possibly up to 100 percent. 
 
Vietnamese Nuclear Concerns 
--------------------------- 
 
¶9. (SBU) Various interlocutors noted four particular concerns with 
the development of civilian nuclear power - financing, safety, fuel 
supply, and management of spent fuel.  EVN acknowledged possible 
financing problems given Vietnam's current economic uncertainty. 
Indeed, Vietnam had not yet identified sources of funding to build 
its first nuclear plants.  EVN anticipated that it would request 
construction bidders to identify these sources.  EVN noted that it 
could not rely upon Official Development Assistance for the 
reactors, estimated to make up 45 percent of all costs, though it 
might be able to do so for other components.  EVN expected to rely 
completely upon fuel imports for the first nuclear facilities and 
stressed its particular desire to ensure adequate fuel supplies and 
its concerns about any fuel supply monopolies.  Though Vietnam was 
pondering eventual nuclear fuel production and has some nuclear 
mining and milling capacity, EVN noted that it did not have the 
ability to enrich uranium.  Therefore, Vietnam sought GNEP 
assistance to identify needed imports for the foreseeable future. 
EVN is also concerned about how to dispose of or recycle spent fuel. 
 McGinnis again noted the benefits of GNEP membership for nations 
looking for sustainable fuel supplies and highlighted growing U.S. 
enrichment capacity, while emphasizing GNEP's focus on all stages of 
nuclear power, including proper handling of spent fuel. 
 
Comment 
------- 
 
¶10. (SBU) Vietnam is serious about developing a civilian nuclear 
power sector and highly values U.S. safety and security assistance 
to meet that target.  At the same time, the United States recognizes 
Vietnam's responsible approach to nuclear power, which seeks to 
further joint nonproliferation goals.  Over the next few years, we 
expect to see even closer cooperation between the two countries, 
which we hope to leverage into Vietnamese entry into GNEP.  Our 
increasingly tight safety and security relationship may provide 
opportunities for U.S. commercial firms to enter a rapidly 
developing market.  However, we are not alone, as   Japan, Korea, 
 
HANOI 00000898  004.2 OF 004 
 
 
China, Russia, and France actively promote their nuclear sectors in 
Vietnam.  We will need to fight for this market. 
 
¶11. (U) This cable has been cleared with the DOE delegation. 
 
MICHALAK