Hello. I am Doctor Michael Ivanco, Vice President of the Society of Professional Engineers and Associates (SPEA) and a scientist who works for Atomic Energy of Canada Limited (AECL). SPEA represents engineers, scientists, technicians and technologists who work for the CANDU reactor division of AECL. Our members work in Ontario, Quebec, New Brunswick and internationally.
Collectively we represent most of Canada’s nuclear design expertise; indeed the intellectual property associated with CANDU reactor design is resident primarily within our members.
Section 18 of Bill C-9 contains proposed legislation that allows for the sale of AECL but, essentially, it is our members that are for sale. As a company, the CANDU reactor division of AECL does not hold many patents and it holds few physical assets, such as buildings or property. The sale consists primarily of the transfer of the knowledge, skills, and experience of the employees who work there, our members. Hence we have a keen interest in this Bill.
In response to the growing business opportunity around the world, our competitors have been restructuring. In Russia, State owned Atomenergoprom has formed a collaboration with GazPrombank, the largest private sector bank in Russia, to form Atomstroyexport. This consortium recently won a competition to build new power reactors in Vietnam.
In Korea, the state owned electric power corporation, KEPCO, has formed a partnership with Doosan Heavy industries, Hyundai and Samsung. They recently won a $20 Billion contract to build 4 reactors in the United Arab Emirates.
The Japanese government is forming a consortium to compete in the export market. This consortium will be led by the government who will be an equity partner. It will involve three electrical utilities, as well as three private sector companies; Hitachi, Westinghouse Toshiba and Mitsubishi Heavy Industries.
All of these consortia are either government owned or government led public private partnerships in which the governments share both risk and reward. However, the private sector partners know that government equity and partnership gives long term credibility with potential buyers of nuclear reactors. A nuclear reactor is a strategic 60 to 100 year investment and a buyer needs to know that the seller will support the product over the long term.
These restructurings will put South Korea, Japan and Russia in a good position to compete with state owned AREVA of France, the world’s largest nuclear vendor.
In response to the restructuring in the global nuclear business, the government of Canada has embarked on the restructuring of AECL. In December of 2009, Rothschilds Bank, who was contracted by the Government of Canada to manage the restructuring of AECL, issued an investment summary. The three main policy objectives identified in their summary stated that:
- Canada requires safe, reliable and economic options to address its energy and environmental needs;
- The costs of the Government of Canada’s support of the nuclear industry need to be controlled and the return on its investment in the industry maximized; and
- The final outcome and structure of AECL should position Canada’s nuclear industry to seize domestic and global opportunities.
We agree with these objectives and recognize the need for restructuring. However, SPEA’s concern is that the process that the Government has set-up is focused on a simple financial transaction that will not achieve their own stated policy objectives or deliver good value to the people of Canada who invested in the development of this technology. Indeed, SPEA has learned that it is the government’s intention to sell AECL 100% to the private sector. Such a restructuring would leave AECL as a private sector company in competition with four government owned, or led, consortia as well as General Electric, the world’s second largest corporation, with annual revenues larger than the GDP of most countries. Against such competition, a private sector Canadian nuclear vendor stands no chance of selling a reactor into the international market.
SPEA believes that the three policy objectives in the Rothschild’s investment summary are effectively a contract with the people of Canada and that the Government is obligated to deliver on them. However, as far as we can tell, there is no one on the Rothschild’s restructuring team that can advise on these issues. None of the policy objectives are entirely related to the financial value of the transaction, yet there appears to be a large number of advisors entirely focused on this aspect of the transaction.
This imbalance suggests to us that the process is not designed to deliver on the policy objectives. The process is being kept under a cloud of secrecy and no one in Canada will have a chance to comment on the outcome until it is too late. This may well lead to an inappropriate outcome: the potential loss of the nuclear industry, its Canadian jobs; even, a loss of electrical power generation in Ontario, if the critical mass of nuclear expertise within AECL, that supports the safe operation of nuclear power plants, is dispersed. This is such a problem of such magnitude that the Canadian economy would likely collapse. This should cause grave concern to all Canadians.
Bill C-9 gives carte blanche to cabinet to dispose of the largest Canadian Crown Corporation in whatever way it sees fit, with no oversight from parliament. Imagine giving a real estate agent permission to sell your house without requiring that you agree to the terms and conditions of the sale. This is what the government is asking you to do when you approve Bill C-9, as it applies to AECL. AECL, which was created through an Act of Parliament in 1952, will be dissolved through an act of Cabinet and Parliament will have no say. This is a travesty of democracy.
The legislation that allows for the restructuring of AECL should allow the Government to implement the restructuring in a prompt and efficient fashion while ensuring that the restructuring achieves the stated policy objectives.
This requires that:
- The review of the restructuring opportunities be undertaken by a team with all the necessary competencies and must include representatives of the industry, labour and current CANDU operators. Cross party representation on this team would be appropriate.
- Appropriate weighting be given to the evaluative criteria and these are scored by the competent people on the team.
- The results of the evaluation by the team are made public in order to demonstrate to the Canadian public that the stated policy objectives were met.
Without such checks and balances, Canadians will have no evidence or confidence that the restructuring of AECL will be good for Canada.
Canada has created a unique nuclear technology and we are one of only 6 countries in the world that belong to the prestigious circle of nuclear reactor builders, all members of the G-8. Our last 7 new-build projects, conducted over the last two decades, have come in on time and on budget. Three CANDU reactors are amongst the top 5, out of 440 in the world, in lifetime performance.
We are second to no one in terms of our technology. We urge you to remove section 18 from Bill C-9 and let parliament decide the fate of AECL, the cornerstone of Canada’s nuclear industry. AECL’s fate should be decided by parliament, not the cabinet.