Last week, Shrem Fudim Kelner & Co. (TASE: SFK) chairman Itschak Shrem told “Globes” that Environmental Energy Resources (EER) was the SFK subsidiary with the most potential for increasing its value. EER develops innovative methods for treating radioactive waste. It is now clear what Shrem was talking about.
SFK announced that EER had signed an agreement in principle to cooperate with the Ukrainian government and the Kurchatov Institute. The Ukrainian government will use technology developed by EER and the Kurchatov Institute to construct a number of facilities at Chernobyl to eliminate radioactive waste at a low level of radioactivity. In other word, the Ukrainian government, through an international committee appointed to solve the problem of radioactive waste in Chernobyl, has chosen EER’s solution for treating the radioactive waste created by the Chernobyl nuclear disaster.
EER will carry out the project under the build, operate, transfer (BOT) method. The project amounts to $400 million. EER plans to raise money for the project from international sources. The agreement is spread over 20-25 years, and the annual gross revenues from the project of EER and its partners are estimated at $30-35 million. Profits from the project cannot be estimated before the parties sign a final detailed agreement, and a financing plan for the project is devised. Capital market sources, however, estimate profits from projects of this kind at $7-10 million annually.
Itschak Shrem said today that in addition to the financial value of EER’s win in the tender, which speaks for itself, the international recognition of EER’s technology gained by winning the contract would create further options for the company.
Published by Globes [online] - www.globes.co.il - on June 28, 2004