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DE RUEHTA #1222/01 2040729
ZNR UUUUU ZZH
O 230729Z JUL 09
FM AMEMBASSY ASTANA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5845
INFO RUCNCIS/CIS COLLECTIVE 1785
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUCNIRA/IRAN COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 1152
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RUEHUL/AMEMBASSY SEOUL 0813
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
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RUEAIIA/CIA WASHDC
RHEFAAA/DIA WASHDC
RHEHNSC/NSC WASHDC 1337
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RUEKJCS/JOINT STAFF WASHDC
RHMFIUU/CDR USCENTCOM MACDILL AFB FL
RUEHAST/USOFFICE ALMATY 1720

UNCLAS SECTION 01 OF 03 ASTANA 001222 
 
SENSITIVE 
SIPDIS 
 
STATE FOR SCA/CEN, T, ISN 
STATE PLEASE PASS TO USTDA 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EMIN ENRG EINV KNNP KZ
SUBJECT:  KAZAKHSTAN:  AMBASSADOR VISITS BN-350 NUCLEAR REACTOR, 
MANGISTAU ATOMIC ENERGY COMPLEX 
 
REF:  (A) 08 ASTANA 2298 
      (B) 08 ASTANA 2316 
      (C) 08 ASTANA 2345 
      (D) ASTANA 0943 
      (E) ASTANA 1220 
 
ASTANA 00001222  001.2 OF 003 
 
 
¶1.  (U) Sensitive but unclassified.  Not for public Internet. 
 
¶2.  (SBU) SUMMARY:  On July 16, the Ambassador toured the Mangistau 
Atomic Energy Complex (MAEC), including the decommissioned BN-350 
fast-breeder nuclear reactor, the sodium processing facility (SPF), 
and a desalinization plant.  The Ambassador then met with MAEC 
General Director Saken Utebayev, who expressed his appreciation for 
U.S. assistance, confirmed the government's plans to build a new 
nuclear power plant on site, and promised to remove and store all 
spent nuclear fuel by 2010.  Utebayev also complained that he has 
been hounded by the Prosecutor General for the past three years for 
allegedly engaging in monopolistic behavior and not paying taxes on 
U.S. technical and financial assistance.  END SUMMARY. 
 
STORAGE CASKS FILLED AND READY FOR TRANSPORT 
 
¶3.  (SBU) Gennadiy Pugachev, director of the BN-350 facility, 
welcomed the Ambassador and showed him around the spent fuel storage 
site.  He thanked the U.S. government profusely for providing 
significant technical and financial assistance to MAEC in support of 
the BN-350 decommissioning program.  Pugachev pointed to 11 large 
casks lined up underneath a large crane and said they were filled 
with spent fuel -- "mostly uranium, with some plutonium" -- and were 
ready for transport to a permanent storage facility in Baikal-1 
(Eastern Kazakhstan).  He told the Ambassador that MAEC plans to 
begin transporting all 18 casks to Baikal-1 in October.  When the 
Ambassador asked him how much additional funding was required to 
transport the casks, Pugachev said, "We need another $7.5 million." 
(NOTE:  This figure is higher than the $5 million the government of 
Kazakhstan initially expected this work would cost during 2009, but 
is lower than the total expected cost of $14 million through 2010. 
END NOTE).  Pugachev also said that all of the storage casks on site 
were made in Russia, although MAEC ordered additional casks from a 
factory in Sumi, Ukraine, that missed its deadline and had not yet 
made delivery.  "It is not easy to work with the Ukrainians these 
days," he said. 
 
SODIUM-PROCESSING FACILITY OPERATIONAL... 
 
¶4.  (SBU) Pugachev also showed the Ambassador the $3.35 million 
sodium-processing facility, which was completed in November 2008 
with U.S. assistance as the final step in the irreversible 
decommissioning of the BN-350 plutonium fast-breeder reactor (reftel 
A).  At the entrance to the SPF, there is a large, brightly colored 
plaque acknowledging U.S. government support for the project.  As 
reported in reftel A, the SPF is designed to process solidified 
residual sodium from the BN-350 reactor into sodium hydroxide. 
 
BUT LACK OF GEO-CEMENT STONE FACILITY DELAYS STORAGE 
 
¶5.  (SBU) Pugachev told the Ambassador that the SPF functions 
properly, and that earlier problems with escaping gas have been 
resolved.  The government previously committed to building a 
geo-cement stone facility in which the sodium hydroxide solution 
generated by the SPF would be combined with blast-furnace slag and 
solidified in steel drums for long-term storage above ground. 
Unfortunately, despite ongoing assistance from the British 
government, construction of the geo-cement stone facility is on 
hold, due to a lack of government funding.  This, in turn, has 
delayed plans to put the radioactive waste in safe, long-term 
storage. 
 
FIRST IMPRESSIONS OF THE BN-350 REACTOR 
 
 
ASTANA 00001222  002.2 OF 003 
 
 
¶6.  (SBU) The building housing the reactor is remarkable for its 
complete lack of distinguishing features:  it is simply a series of 
faded yellow rectangular cement blocks stacked one on top of another 
in a functional yet uninspired Soviet style, flanked by red and 
white striped concrete cooling towers.  Nevertheless, standing 
outside this nondescript building, which produced weapons grade 
material at the height of the Cold War and has since been 
decommissioned with the help of U.S. nuclear scientists, one cannot 
help but be struck by the irony of fate. 
 
FROM PLUTONIUM TO HEAT, POWER, AND WATER 
 
¶7.  (U) Now that the BN-350 breeder reactor has been decommissioned, 
MAEC's main business is running a combined heat-, power-, and 
water-producing complex that provides electric power and potable 
water to the populated areas and enterprises of Mangistau oblast 
(province) and Atyrau oblast.  The power complex includes three 
combined heat and power (CHP) plants that generate up to 500 
megawatts of electricity, a desalinization plant that produces up to 
40,000 cubic meters of distillate per day (or 15 percent of Aktau's 
potable water consumption), heating mains and pipelines with central 
water supply units, a power transmission line with substations, a 
water intake structure, repair works, a petroleum storage depot, a 
fuel-oil storage tank, and other infrastructure facilities.  MAEC is 
also considering constructing a new dry gas power plant with a 
capacity of 200 megawatts. 
 
MAEC GENERAL DIRECTOR DISCUSSES NUCLEAR POWER PLANT... 
 
¶8.  (SBU) Following the tour, the Ambassador met with MAEC General 
Director Utebayev, who was appointed to his position four years ago 
by then-Minister of Industry and Trade Vladimir Shkolnik, a nuclear 
scientist who worked at MAEC for twenty years and is now the head of 
state nuclear company Kazatomprom (KAP).  Utebayev told the 
Ambassador that he expects the government to move forward with 
stated plans to build a new nuclear power plant on site at MAEC.  He 
said that preliminary engineering studies have already been done and 
they are now just waiting for a decree from Prime Minister Masimov 
authorizing construction.  Utebayev said the government could save 
up to 20 percent in costs by building the plant at the MAEC, because 
much of the necessary infrastructure is already in place. 
 
PROMISES TO MEET 2010 DEADLINE... 
 
¶9.  (SBU) Regarding the transportation and storage of spent fuel 
from the BN-350 reactor, Utebayev said, "We have met all of the 
targets in our work plan and are moving ahead of schedule.  We will 
meet our deadline to move all of the containers by the end of 2010." 
 Utebayev thanked the Ambassador for the "world class" expertise and 
financial support provided by the U.S. government during the past 
several years, and promised to do his part to honor MAEC's 
international commitments.  Commenting on the SPF project, Utebayev 
said the new facility works as designed, passed inspection by U.S. 
and U.K. experts, and is ready to load radioactive sodium waste. 
Unfortunately, according to Utebayev, the required geo-cement 
storage facility is not ready due to a lack of government funding. 
"We did our part," said a clearly frustrated Utebayev, "but now the 
project has stalled, because we are dependent on others." 
 
AND APPEARS TO BE UNDER SEVERE STRESS 
 
¶10.  (SBU) Utebayev, a competent technocrat and respected manager 
who appears to be in his forties, confided to the Ambassador that he 
has been under constant stress lately, not least because of the 
arrest and prosecution of former KAP president Mukhtar Dzhakishev, 
whom he considers a mentor (reftel D).  (NOTE:  Utebayev gave the 
Ambassador a copy of MAEC's latest annual report, which opens with 
an upbeat welcome in English from Dzhakishev.  MAEC is 100 percent 
owned by Kazatomprom.  END NOTE).  Utebayev also said that he has 
been hounded for the past three years by the Prosecutor General for 
 
ASTANA 00001222  003.2 OF 003 
 
 
allegedly engaging in monopolistic behavior regarding residential 
electricity prices, and for allegedly avoiding taxes on U.S. 
Government-provided technical and financial assistance.  He said the 
government issued a decree allowing MAEC to set up a special legal 
entity for one year to transfer the assets received under U.S. 
government assistance programs to its balance sheet -- but he called 
this only a temporary solution, and does not expect his problems 
with the Prosecutor to disappear.  (NOTE:  As reported in ref E, the 
Ambassador raised the asset transfer issue with Prime Minister 
Masimov on July 22.  END NOTE.)  Utebayev at this point became 
visibly upset.  "Don't they understand what kind of business this 
is?," he asked plaintively.  "This is an atomic energy company.  I 
cannot afford a single mistake.  I have as my primary concern the 
safety and welfare of the entire population of Mangistau oblast. 
Don't they know that?" 
 
HOAGLAND