UPDATE ON NUCLEAR LAW AND NUCLEAR LIABILITY

C O N F I D E N T I A L CAIRO 000608 SIPDIS NEA/ELA FOR NEWHOUSE, ISN FOR HUMPHREY, ENERGY FOR SCOTT, NNSA FOR ROBINSON E.O. 12958: DECL: 04/08/2019 TAGS: ENRG PGOV ECON EG SUBJECT: UPDATE ON NUCLEAR LAW AND NUCLEAR LIABILITY REF: A. 2008 CAIRO 574 ¶B. 2008 CAIRO 1307 ¶C. CAIRO 25 Classified By: Catherine Hill-Herndon, Counselor for Economic and Polit ical Affairs ¶1. (C) Key points: -- Bechtel's local manager believes that the draft nuclear law will be submitted to the People's Assembly and approved before the end of the current session. -- The draft law has been amended to clarify that responsibility for nuclear accidents rests with the GOE, not on the Nuclear Power Plant Authority's (NPPA) consultants or plant operators. ¶2. (C) The Egyptian Nuclear Power Plants Authority (NPPA) awarded a nuclear consulting services tender in December 2008 to Bechtel, a U.S. engineering and energy services company, to support the development of Egypt's civilian nuclear energy program, contingent on the passage of a law authorizing the program (refs A-C). Minister of Electricity and Energy Hassan Younes announced in early April that the draft law would be submitted to the People's Assembly before the end of the month. Dr. Asem El Gawhary, Bechtel's Principal Vice President and Manager of Egyptian Operations, told econoff April 7 that bureaucratic disputes between the Ministries of Electricity/Energy and Health regarding the bureaucratic restructuring called for in the law had been resolved by the State Council. The law would establish an independent regulator, known as the "Radioactive and Nuclear Activities Control Authority," reporting to the Prime Minister. He anticipates that the proposed law will be submitted to the People's Assembly by early summer. El Gawhary observed that the nuclear energy program has the direct support of President Mubarak and is likely to be approved with few amendments. -------------- DRAFT LAW ADDRESSES NUCLEAR LIABILITY -------------- ¶3. (C) Bechtel Power President Jack Futcher and El Gawhary told the Ambassador in early April that they asked the Minister of Electricity and Energy Hassan Younes to clarify the issue of liability for nuclear accidents in their contract or in the draft law, as Egypt had not yet signed the Convention on Supplementary Compensation for Nuclear Damage (CSC). El Gawhary subsequently told econoff that the draft law had been tweaked to place full liability on the GOE and said that Bechtel was comfortable proceeding with this draft language. He added that the law, as currently written, did not place a cap on liability, which would make it difficult for the GOE to obtain insurance against nuclear accidents. El Gawhary speculated that the GOE will likely sign and ratify the CSC after the nuclear law passes, in order to take advantage of the risk and cost-sharing arrangement it provides amongst signatory nations. -------------- ROLE OF THE NDP ENERGY COMMITTEE -------------- ¶4. (C) Energy analysts in the Egyptian Center for Economic Studies believe that the initiative to develop civilian nuclear energy in Egypt originated within the governing National Democratic Party's (NDP) Energy Committee, led by former Electricity Minister Ali Al Saiedi and NDP Strategy chief Gamal Mubarak. El Gawhary emphasized to econoff that Gamal Mubarak was closely involved in negotiating to resolve bureaucratic and political obstacles to the draft law, and that he will likely compel NDP deputies to approve the bill quickly. SCOBEY