VZCZCXRO4227
RR RUEHAST RUEHCHI RUEHCN RUEHDT RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD
RUEHTM
DE RUEHHI #1405/01 3590724
ZNR UUUUU ZZH
R 240724Z DEC 08
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 8933
INFO RUEHHM/AMCONSUL HO CHI MINH 5431
RUEHFR/AMEMBASSY PARIS 0519
RUEHZS/ASEAN REGIONAL FORUM COLLECTIVE
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFISS/DEPT OF ENERGY WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC
RHMFIUU/CDR USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 06 HANOI 001405 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/MLS, EAP/EP, OES/EGC, OES/STC 
STATE ALSO FOR T (JWOLCOTT, MHUMPHREY), ISN/NESS 
(ABURKART,PMCNERNEY), ISN/RA (RBEISECKER) AND EAP/MLS 
STATE PASS TO NUCLEAR REGULATORY COMMISSION (KFOGGIE, 
JMCLELLAND-KERR, SBURNS) 
ENERGY FOR DOE/NE (EMCGINNIS, CWELLING), NNSA/NA-21 (SFRAZER, KAPT, 
DKOVACIC, SDICKERSON, IBOLSHINSKY, SMOSES, ABIENIAWSKI) 
COMMERCE PLEASE PASS TO USTDA (DROSSITER) 
COMMERCE FOR SLOPP AND ITA/MAC/HHPHO 
 
E.O. 12958: N/A 
TAGS: ENRG TRGY SENV BEXP BTIO VM
SUBJECT: VIETNAM'S AMBITIOUS NUCLEAR POWER PLANS 
 
Ref: A. HANOI 1352 B. HANOI 1252 C. HANOI 1267 D. HANOI 1048 E. 
HANOI 966 F. HANOI 898 G. HANOI 610 H. 07 HANOI 1867 
 
HANOI 00001405  001.2 OF 006 
 
 
SENSITIVE BUT UNCLASSIFIED.  NOT FOR DISSEMENATION OUTSIDE THE USG 
OR INTERNET POSTING. 
 
¶1. (SBU) Summary:  Vietnam has ambitious plans to develop its 
civilian nuclear power sector.  In the face of rapidly expanding 
demand for power and few other domestic sources of energy, the 
Government of Vietnam (GVN) wants to move quickly to construct the 
nation's first nuclear power plants.  Acknowledging its limited 
capacity to build, operate, and regulate this industry, Vietnam will 
rely upon foreign partners for substantial assistance.  The United 
States has developed close cooperation with the GVN to support 
safety and security infrastructure, which will facilitate access to 
the market for U.S. companies.  However, competition will be stiff 
as many other nuclear suppliers are targeting Vietnam.  End 
Summary. 
 
¶2. (U) This cable responds to State 12743 and follows its format. 
 
Vietnamese Plans for the Development 
of Nuclear Power 
------------------------------------ 
 
¶3. (SBU) Vietnam currently does not have any nuclear power 
facilities.  However, the country has an ambitious plan for the 
commercial nuclear sector.  In 2006, the Prime Minister approved a 
strategy for the development of the nuclear power for civilian 
purposes (power and other applications) through 2020.  Subsequently, 
in July 2007, the GVN adopted a "Master Plan for Implementation of 
the Long-term Strategy."  Vietnam's National Assembly passed a 
comprehensive Atomic Energy Law on June 3, 2008.  Pursuant to the 
master plan approved by the Prime Minister, Vietnam intends to 
produce 10,000 megawatts from nuclear energy by 2030.  Per the 
Vietnam Agency for Radiation and Nuclear Safety (VARANS, formerly 
VARANSAC), Vietnam hopes to generate 3.3 percent of its energy from 
nuclear power by 2020 and 4.7 percent by 2025 (Note: Vietnam 
Electricity (EVN), the state-owned electricity provider provides 
somewhat more conservative estimates -- 1 percent of Vietnam's 
energy from nuclear power by 2020 and 6 percent by 2030). 
 
¶4. (SBU) In several meetings with the Embassy, USG delegations, and 
other Embassy contacts, GVN officials have set forth proposed 
timelines for the development of nuclear power.  However, given the 
many players within the GVN, the difficult and time consuming 
process to receive intra-GVN policy consensus, and the GVN's 
still-evolving understanding of the practical requirements of 
developing the nuclear power sector, the timeline described below 
needs to be seen as highly preliminary and likely to change.  Though 
GVN officials initially informed USG delegations of their intention 
to construct a 2,000 MW nuclear power plant (NPP) near the coast at 
Phuoc Dinh (in rural, southern Ninh Thuan province), those officials 
subsequently have told Embassy contacts that the GVN now envisions a 
4,000 MW NPP consisting of twin double 1,000 MW reactor units in 
Ninh Thuan province, which would be integrated by an exclusive line 
into a 500 kv grid, which would then be integrated into the national 
grid (ref F).  (Note: per VARANS, exact power production figures 
could vary slightly depending upon negotiations between the 
state-owned national electricity company, EVN and contractors). The 
Phuoc Dinh site and the proposed  site in  Vinh Hai (also in Ninh 
Thuan province) for the second NPP are in rural areas far from 
population centers. 
 
¶5. (SBU) EVN recently finalized a Pre-feasibility Report, which it 
will soon submit to the Prime Minister for approval.  Following the 
Prime Minister's okay, EVN will present the study to the National 
Assembly in May 2009 for the final go ahead.  The GVN expects the 
completion of a feasibility study, with technology preference, in 
2009/10 and the submission(s) of the NPP license application(s) by 
2011, followed by the development of the technology technical 
description.  In 2012-2013, the GVN would receive bids for 
engineering, procurement, and construction (EPC) contract(s) with 
bid and vendor selection and nuclear design and construction 
 
HANOI 00001405  002.2 OF 006 
 
 
approvals in 2013-14.  Construction would begin around 2015, and the 
first of the possible four reactors would come online around 2020, 
with additional reactors entering service through 2022.  MOST 
officials commented that since Vietnam lacked the experience 
necessary for the development of a nuclear power program, it would 
rely heavily on nuclear cooperation with advanced nuclear energy 
states. 
 
Existing or Planned Nuclear Power Related 
Facilities, Such as Uranium Mining 
----------------------------------------- 
 
¶6. (SBU) Vietnam does not have any existing nuclear power related 
facilities, though it continues to operate a nuclear research 
reactor in Dalat built by the United States for the Republic of 
Vietnam in the 1960s and modified by the Soviet Union in the 1970s. 
Currently, the United States is negotiating to finalize conversion 
of the facility from dependence on highly enriched uranium (HEU) to 
low enriched uranium (LEU).  In 2007, the United States, Russia, and 
Vietnam completed the return of fresh HEU to Russia.  We hope to 
return spent HEU to Russia in 2010. 
 
¶7. (SBU) In the long-term, Vietnam is contemplating the creation of 
certain nuclear support sectors, but has not developed any concrete 
plans.  EVN stated that Vietnam had some nuclear mining and milling 
capability, though it did not have the capacity to enrich uranium. 
According to VAEC, Vietnam only has low-content uranium ores. 
Though VAEC has been working on plans to mine these ores for many 
years, such plans are not close to finalization. 
 
Underlying Motivations for 
Development of Nuclear Power 
---------------------------- 
 
¶8. (SBU) The GVN has focused on the development of nuclear power to 
resolve anticipated power shortages and to deepen Vietnam's energy 
security.  Vietnamese energy sector experts increasingly point to 
nuclear energy to supplement Vietnam's limited domestic energy 
generation capacity (ref F).  The GVN's Energy Master Plan VI, 
released in July 2007, predicts that demand for electricity will 
grow 20 percent annually through 2015, while the Ministry of 
Industry and Trade (MOIT) now predicts growth of 17 percent per 
year, reflecting the expected impacts of the global economic 
downturn.  Vietnam will soon run out of new sources of hydropower 
and by 2011 expects to begin importing coal (ref H).  Vietnam also 
plans to import electricity from planned Lao hydro-electric 
facilities. Substantial offshore natural gas reserves may be blocked 
by political maneuvering over control of the South China Sea. 
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.  Though not a 
significant factor in Vietnam's decision-making process, the lack of 
greenhouse gas emissions from nuclear power makes it a more 
attractive alternative to the continued expansion of domestic 
coal-fired power. 
 
Anticipated GVN Role 
in the Civil Nuclear Sector Financing 
------------------------------------- 
 
¶9. (SBU) We do not believe that the GVN has made substantial headway 
in determining how to finance the development of the nuclear sector. 
 In meetings with the State Department Special Envoy for 
Nonproliferation, Ambassador Jackie Wolcott (ref D), Vietnamese 
officials acknowledged that they had not yet seriously considered 
this challenge and had assumed that financing could be secured via 
loans from the World Bank, the International Monetary Fund, or the 
Asian Development Bank, or via export credits.  MOIT Vice Minister 
Do Huu Hao told a DOE delegation in August that while 
State-controlled EVN would serve at the sole investor in the first 
two nuclear reactors, Vietnam might open up subsequent facilities to 
foreign investment, possibly up to 100 percent (ref F).  EVN, in 
turn, acknowledged possible financing problems and anticipated 
requesting construction bidders to identify sources of funding.  EVN 
 
HANOI 00001405  003.2 OF 006 
 
 
officials emphasized that all financing options remain on the table 
though they also mentioned the possibility of a Build, Operate and 
Transfer (BOT) arrangement.  EVN noted that it could not rely on 
Official Development Assistance for the reactors, though it might be 
able to do so for other components. 
 
Names and Titles of Key Nuclear Decision makers 
--------------------------------------------- -- 
 
¶10. (SBU) Given the high risk and reward calculus for the 
development of a civilian nuclear power sector, all nuclear 
agreements/projects must be approved by the Prime Minister.  Prime 
Minister Nguyen Tan Dung played an active role in the decision to 
site the first nuclear power reactors in Ninh Tuan province. 
Additionally, large projects such as nuclear power plants, which are 
related to energy security, must also receive final approval from 
the National Assembly.  Within the GVN, Deputy Prime Minister Hoang 
Trung Hai has responsibility for all energy issues.  (Note: In 
Vietnam's consensus-driven decision making process, Hai must 
coordinate input from several ministries and does not have the power 
to force solutions or timetables on other participants).  Hai met 
with DOE and USTDA to discuss nuclear power and visited a nuclear 
power plant during his November 2008 visit to the United States. 
 
¶11. (SBU) The Ministry of Industry and Trade (MOIT) has 
responsibility for developing the Vietnamese power sector.  Within 
MOIT, Vice Minister Do Huu Hao supervises nuclear power issues.  On 
a practical level, the MOIT Department of Energy, headed by Ta Van 
Huong, focuses on nuclear energy.  State-owned EVN will develop 
Vietnam's first nuclear power plants.  Phan Minh Tuan, Head of the 
Nuclear Power and Renewable Energy Projects Pre-investment Board, 
supervises EVN's nuclear strategy discussions. 
 
¶12. (SBU) VAEC and VARANS, together with their parent Ministry, 
MOST, play key roles in developing the necessary infrastructure for 
the planned civilian nuclear power sector.  MOST exercises oversight 
of Vietnam's nuclear program and serves as the designated regulator. 
 MOST Minister Hoang Van Phong does not focus on nuclear energy. 
Vice Minister Le Dinh Tien's portfolio contains nuclear energy 
(Note: Tien will be in Washington from January 2 to 7 and would like 
to meet with DOE and State, ref A).  MOST Vice-Minister Tran Quoc 
Thanh covers general U.S.-Vietnam science and technology cooperation 
and also plays a role in MOST nuclear policy considerations.  The 
VAEC, led by Chairman Vuong Huu Tan and with a staff of 600, an 
administrative and scientific agency under MOST, advises MOST on 
nuclear policy (and continues to support EVN in the development of 
the pre-feasibility study for the first planned nuclear reactors) 
and operates the Dalat nuclear research reactor.  Dr. Ngo Dang Nhan, 
serves at the director of VARANS, Vietnam's designated nuclear 
regulatory body. 
 
GVN Nuclear Regulatory Authority 
-------------------------------- 
 
¶13. (SBU) The Vietnamese nuclear regulatory agency, VARANS, was 
established in 2003 under MOST and assists the MOST Minister in the 
state management of radiation and nuclear safety and control. 
VARANS has grown rapidly, from less than 10 employees in 2004 to 
over 50 in 2008.  In addition to its recent MOU with the U.S. 
Nuclear Regulatory Commission, VARANS has signed a technical 
cooperation MOU with the Korean nuclear regulatory authority and 
also has close ties with Australian nuclear regulators.  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.  VARANS played a key 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 VARANS'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 
 
HANOI 00001405  004.2 OF 006 
 
 
safety and security infrastructure. 
 
Vietnamese Nuclear Liability Provisions 
--------------------------------------- 
 
¶14. (SBU) Vietnam has not yet joined the Convention on Supplementary 
Compensation for Nuclear Damage (CSC) and does not have a separate 
law on domestic nuclear liability.  According to VARANS, Vietnam is 
not a party to any international liability regime and is not yet 
considering joining any.  The new Law on Atomic Energy (AEL), passed 
by the National Assembly in June 2008 generally covers liability 
issues.  VARANS is drafting decrees to guide implementation of the 
law which will be submitted to the GVN in early 2009.  In 
particular, the AEL stipulates that radiation damage compensation 
levels shall comply with Vietnam's Civil Law and that nuclear damage 
compensation levels shall be determined as agreed between concerned 
parties.  Where the parties cannot come to an agreement, 
compensation levels for humans shall be determined in accordance 
with Civil Law, while compensation level for environment shall be 
specified in accordance with Vietnam's Environmental Protection Law. 
 Total compensation for damage resulted from each nuclear incident 
shall not exceed 150 million Special Drawing Rights as determined by 
the International Monetary Fund. 
 
Nuclear-related Manufacturing Base 
---------------------------------- 
 
¶15. (U) Vietnam's manufacturing base is not involved in 
nuclear-related products or services and has no plans to do so in 
the short to medium term.  The GVN would like to develop some of 
these sectors over the next several decades, but acknowledges it 
will take many years to develop the technical and human capacity to 
do so. 
 
Nuclear Workforce 
----------------- 
 
¶16. (SBU) Currently, the GVN does not have a nuclear-trained 
workforce, nor does it have a significant engineering, technician 
and construction base that could be readily converted into a nuclear 
workforce.  Both EVN and GVN nuclear research and regulatory 
authorities contain engineers who received nuclear training in the 
Soviet Union and former Eastern Bloc.  However, this relatively 
small cadre has had limited exposure to modern nuclear technologies 
and likely will have retired prior to the development of Vietnam's 
civilian nuclear power sector.  EVN acknowledges its limited human 
resources capacity and anticipates contracting with foreign 
technicians to operate Vietnam's first nuclear plants while training 
EVN staff - a process which EVN believes will take 15-30 years.  EVN 
has also sent engineers for training to South Korea, France and 
Japan. 
 
¶17. (SBU) Domestically, the Ministry of Education and Training 
(MOET) is developing an HR training and development plan for the 
nuclear sector, which it plans to finalize for intra-GVN review in 
the next few months.  The plan calls for Vietnam to send several 
core experts to countries with developed nuclear power sector for 
training and, in the long-term, to develop domestic capacity for 
such training.  MOET also is formulating a project to develop 
nuclear power-related curricula in several universities by sometime 
in 2009.  MOST is considering a proposal to establish a center to 
specialize in nuclear training, though the initiative remains rather 
unclearly defined.  VARANS has sought training for its personnel 
from the U.S. DOE and NRC, along with other partners, such as 
Japan. 
 
Nuclear-related Tenders 
----------------------- 
 
¶18. (SBU) Once the National Assembly approves the VAEC/EVN 
pre-feasibility study for the initial nuclear reactor construction, 
EVN will coordinate the tender process to draft a full feasibility 
study, which is expected to be tendered right after the 
pre-feasibility study has been approved by the National Assembly - 
 
HANOI 00001405  005.2 OF 006 
 
 
no earlier than the third quarter of 2009.  Subsequently, according 
to EVN, it will consider all options for nuclear vendors and 
financing and the GVN would decide upon what type of contractor and 
technology that it would use.  (Note: VARANS 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.  GVN contacts have reported interest from 
Westinghouse-Toshiba and General Electric-Hitachi (ref G). 
 
Opportunities for U.S. Industry 
------------------------------- 
 
¶19. (SBU) As Vietnam develops civilian nuclear power, U.S. industry 
will have opportunities to participate in all facets of the nuclear 
sector.  Initially, U.S. firms will be able to bid on feasibility 
and consulting services.  Over time, we expect to see opportunities 
for plant construction management, reactor sales, fuel cycle service 
provisions, plant operations, management, and logistics. 
 
Primary Companies (Domestic and Foreign) 
Involved in Civil Nuclear Sector 
---------------------------------------- 
 
¶20. (U) The GVN has designated state-owned EVN as the lead for the 
development of Vietnam's first NPP.  Though Vietnam has few 
companies interested in other aspects of the nuclear sector, many 
foreign companies and governments have expressed interest in 
participation, though none have yet entered the market. 
 
Foreign Competitors 
------------------- 
 
¶21. (U) Several other nuclear suppliers have shown interest in 
engaging with Vietnam.  According to VAEC, Vietnam has signed five 
cooperation agreements on atomic energy use for peaceful purposes 
with Argentina, India, South Korea, China and Russia. Vietnam has 
also signed an MOU on nuclear power cooperation with France.  Japan, 
China, South Korea, Russia and France have indicated interest in 
commercial nuclear opportunities with French and Russian official 
visits to Vietnam in 2008 promoting their nuclear sectors and 
scheduled visits to those countries from senior MOIT officials. 
France, Russia, China, South Korea and Japan participated in a May 
2008 nuclear power exhibition sponsored by VAEC and EVN (Note: 
France, Japan and South Korea had the largest commercial 
delegations.  No U.S.-affiliated companies attended). 
 
¶22. (U) Besides the United States, France and Japan have developed 
the most extensive ties to GVN nuclear developers and regulators. 
French-Vietnamese nuclear cooperation dates to the 1990s and builds 
from French support for the Vietnamese electricity industry 
(including the recent construction of the Phu My 2-2 BOT Gas 
Electric Plant).  At the May 2008 VAEC/EVN exhibition, French 
exhibitors noted that the Government of France had requested the 
French Committee on Atomic Energy (CEA) to create the French 
International Nuclear Agency to assist nations, such as Vietnam, 
hoping to build their first nuclear power plant. France has also 
assisted Vietnam through assessments of training needs, training, 
guidance in drafting legal documents in the nuclear sector, 
organizing technical seminars and public education.  In mid-2008, 
EVN and Electricite de France (EDF) held a public seminar on nuclear 
power at the site of the proposed first Vietnamese NPPs in Ninh 
Thuan province. 
 
¶23. (U) Japan and Vietnam have cooperated on atomic energy since 
1990, with a focus on the nuclear power sector beginning in 1997. 
Since 2000, several high-ranking GVN delegations have visited 
Japanese nuclear power plants and attended nuclear power seminars. 
From 2002-2004, Japan assisted Vietnam to develop the 
pre-feasibility study for the first nuclear power plants.  Since 
2005, Japan has trained EVN nuclear power technical officers. In 
April 2006, the two countries began a cooperation program for the 
peaceful use of atomic energy and nuclear power plant safety. 
 
HANOI 00001405  006.2 OF 006 
 
 
 
Political Considerations 
------------------------ 
 
¶24. (SBU) If past history is a guide, Vietnam's decisions on nuclear 
technology and suppliers will be influenced as much by political 
considerations as by commercial concerns.  We expect Vietnam to try 
to balance competing interests and, if possible, to split the 
difference.  Earlier this year, Vietnam Airlines split a major 
long-range aircraft order between Boeing and Airbus, despite advice 
that its fleet only needed one such model.  VARANS 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.  More likely, 
Vietnam will consider choosing different designs for its first 
nuclear reactors, allowing companies from more than one key ally to 
participate in the process.  Vietnam has relied upon several 
partners to support the development of its nuclear power sector, 
particularly the United States, but also France and Japan, and will 
do what it can to avoid alienating any of them.  U.S. support, 
evidenced by several existing MOUs and numerous visits to Vietnam by 
U.S. technical experts, has well positioned the United States to 
participate in the development of the Vietnamese nuclear sector. 
 
MICHALAK