VZCZCXRO0930
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHVB #0870/01 3541505
ZNR UUUUU ZZH
P 191505Z DEC 08
FM AMEMBASSY ZAGREB
TO RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEHC/SECSTATE WASHDC PRIORITY 8867
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

UNCLAS SECTION 01 OF 02 ZAGREB 000870 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT FOR EEB/ESC AND T/MARC HUMPHREY, COMMERCE FOR 
ITA SARAH LOPP 
 
E.O. 12958: N/A 
TAGS: ENRG BTIO TRGY BEXP HR
SUBJECT: CROATIA CIVIL NUCLEAR INVESTMENT PLANS: 
CONSIDERING THE NUCLEAR OPTION 
 
REF: STATE 127423 
 
¶1. (U) In response to reftel request, Post has prepared the 
following information on Croatia's current plans for nuclear 
sector investment  This cable was prepared with the 
assistance of embasssy commercial service staff. 
 
¶2. (U) Overview: Croatia released its new national energy 
strategy for public discussion in November.  The strategy 
lays out three possible scenarios for the estimated 10 
billion euros of investment needed to develop the energy 
sector until 2020 in order meet Croatia's increasing demand. 
Among the three scenarios, the draft strategy clearly favors 
the one that includes construction of a 1000 MW nuclear power 
plant.  However, the ruling HDZ party prefers construction of 
a combination of coal and natural gas plants and not a 
nuclear plant.  Discussions within the government continue, 
but the government is expected to officially choose one of 
the scenarios early in 2009.  Croatia currently shares 
operation of the Krsko nuclear power plant in Slovenia, 
originally constructed by Westinghouse in 1983.  For this 
reason, Croatia has a reasonably well-developed contracting 
and component industry.  The Croatian electric power utility 
Hrvatska Elektroprivreda (HEP) estimates that 40% of 
contracting and components for a plant could be supplied 
locally.  HEP has already been in discussions with 
Westinghouse, and visited their facilities in the U.S. 
However, they admit the project is in its infant stages.  The 
energy strategy foresees a 4-6 year "political phase" of 
discussion, feasability studies, and site location 
procedures, before any firm investment decisions are made. 
End Overview. 
 
¶3. (U) Since the breakup of Yugoslavia, Croatia has held a 
50% stake in the Krsko nuclear plant in Slovenia, which was 
constructed by Westinghouse in 1983.  Although relations 
between Slovenia and Croatia over Krsko have been generally 
excellent, concerns over energy security have featured in 
Croatia's discussions of a nuclear plant of its own (Slovenia 
is reportedly considering construction of a second plant at 
Krsko without Croatian participation).  Other factors drawing 
Croatia to consider domestic nuclear power are: low unit cost 
of nuclear power, environmental benefits in terms of CO2 
emissions, and the possibility of becoming an electricity 
exporter.  Because the project is in such an early phase, it 
is impossible to know what role the government would play in 
financing or managing the plant.  However, it is highly 
likely any such project would be financed and managed by HEP. 
 
¶4. (U) In response to reftel request, below are the names of 
the key nuclear decision making bodies and names and titles 
of top officials: 
 
Damir Polancec 
Minister of Economy and 
Deputy Prime Minister 
 
Branimir Horacek 
Director of Energy and Mining 
Ministry of Economy 
 
Mario Horvatic 
Director General 
State office of Nuclear Safety 
 
Ivan Mravak 
President of the Management Board 
Hrvatska Elektroprivreda (HEP) 
 
¶5. (U) The Croatian State office of Nuclear Safety is 
relatively small, under 20 employees, and has the legal 
authority for oversight and inspection activities, as well as 
permitting for any activities covered under Croatian nuclear 
security legislation.  Croatia is party to the Joint Protocol 
Relating to the Application of the Vienna and Paris 
Conventions on Nuclear Liability.  Croatian nuclear liability 
legislation holds operators liable for damages up to 320 
million kuna (approximately $58 million). 
 
¶6. (U) Because of Croatia's involvement with the Krsko plant 
in Slovenia, Croatia has a small but experienced industry 
capable of providing many components and contracting 
services.  According to a member of the HEP board of 
directors, Croatia is capable of providing 40% of the 
components and contracting needs for a nuclear plant. 
Selected local companies with expertise in this area include: 
Djuro Djakovic (construction, worked on Krsko plant); Teh-Cut 
 
ZAGREB 00000870  002 OF 002 
 
 
(components); Pecon (process design, assembly, construction); 
Elektroproject (design and engineering consultant to Krsko), 
Ekonerg (energy consultant who developed the draft national 
energy strategy); Ventilator Group (HVAC, cooling tower fans, 
other components); Inetec (pressure systems and consulting), 
Enconet (waste disposal and emergency response), among others. 
 
¶7. (U) Opportunities for U.S. industry:  There are no current 
tenders in this field.  However, should Croatia decide to 
pursue construction of a reactor as part of its national 
energy strategy, then there would presumably be opportunities 
for U.S. industry across the full range of construction, 
components, operations, and consulting. 
 
¶8. (SBU) In addition to discussions with Westinghouse, 
Croatian HEP has visited French Areva for similar 
introductory talks.  HEP executives were impressed with their 
visit to Westinghouse in the U.S.  Croatia has a 
well-established relationship with Westinghouse through the 
Krsko plant, but other officials have privately admitted to 
us there could be political pressure for Croatia to choose a 
fellow EU supplier (Croatia would presumably be a member of 
the EU by the time any nuclear project got off the ground). 
 
¶9. (SBU) Comment:  The shape of Croatia's future energy 
investment is highly uncertain, especially in the current 
economic climate. While a nuclear plant offers many 
advantages for an energy investment wish-list, experts and 
industry representatives worry that Croatia's energy needs 
are immediate and cannot be served by the long timeline that 
nuclear plant construction requires.  Budget forecasts for 
2009 indicate the government will already strain to pay 
salaries and service its debt, so the government could be 
very reticent to start down an extremely expensive path.  And 
with local elections coming up in 2009, the government will 
be wary of possible strong public opposition to nuclear 
power.  For these reasons, it will likely be years before the 
project materializes, if at all. 
WALKER