Proposal for a COUNCIL DECISION on extension of the advantages conferred on the  Joint Undertaking Hochtemperatur-Kernkraftwerk GmbH (HKG)
Date: 2011-03-24
Institutions: European Commission
Subjects: Germany, decommissioning of power stations, joint venture, nuclear power station, tax exemption

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EUROPEAN COMMISSION 

Brussels, 24.3.2011 
COM(2011) 147 final 

2011/0064 (NLE) 

Proposal for a 

COUNCIL DECISION 

on extension of the advantages conferred on the  
Joint Undertaking Hochtemperatur-Kernkraftwerk GmbH (HKG) 

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EXPLANATORY MEMORANDUM 

EURATOM TREATY PROVISIONS ON JOINT UNDERTAKING STATUS 

Article  45  Euratom  Treaty  provides  for  the  establishment  of  Joint  Undertakings 
which the Treaty defines as undertakings which are of fundamental importance to the 
development of the nuclear industry in the Community. 

Under Article 46 Euratom Treaty, every project for establishing a Joint Undertaking 
is subject to an inquiry by the Commission.  

The  Commission  must  forward  to  the  Council  any  project  for  establishing  a  Joint 
Undertaking, together with its reasoned opinion. 

Under  Articles  47  to  49  Euratom  Treaty,  Joint  Undertakings  are  established  by 
Council decision on a proposal from the Commission. 

HISTORICAL  BACKGROUND  OF  THE  JOINT  UNDERTAKING  STATUS 
OF HKG AND THE THTR 300 PROJECT 

Reasons for the application 

The  objectives  of  Hochtemperatur-Kernkraftwerk  GmbH  (HKG)  were  to  construct, 
equip and operate a nuclear power station at Uentrop (Unna district) in the Federal 
Republic of Germany. This was to be a prototype thorium high-temperature reactor 
with  a  capacity  of  approximately  300  MWe  (THTR  300).  In  order  to  attain  this 
objective, HKG applied for establishment as a Joint Undertaking. 

The  Council  found  that  HKG's  statutes  were  compatible  with  the  provisions  of  the 
Euratom  Treaty  relating  to  Joint  Undertakings  and  that,  at  the  time,  HKG's  project 
was  of  fundamental  importance  to  the  development  of  the  nuclear  industry  in  the 
Community and therefore granted HKG Joint Undertaking status for a period of 25 
years from 1 January 1974. 

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HKG also applied for certain advantages listed in Annex III to the Euratom Treaty. 

Considering that: 

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the nuclear power station was to be constructed by a consortium of Community 
undertakings and nearly exclusively with components from the Community; 

construction  of  the  power  station  would  allow  considerable  improvements  in 
the technical processes for generating electricity on an industrial scale; 

conferment  on  HKG  of  advantages  listed  in  Annex  III  to  the  Treaty  could 
lighten  the  financial  burden  and  limit  the  economic  risks  inherent  in  such  an 
undertaking; 

HKG was to make available to the Community the non-patentable information 
it  would  collect  in  the  course  of  implementing  the  nuclear  power  station 
project, 

the  Council  decided  to  confer  some  of  the  advantages  listed  in  Annex  III  to  the 
Euratom  Treaty,  in  particular  in  the  form  of  exemption  from  some  taxes.  These 
advantages were conferred for a period ending three years after final acceptance of 
the power station by the undertaking. 

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Original decisions 

6. 

In  June  1974  the  Council,  acting  on  proposals  from  the  Commission,  adopted  two 
decisions: 

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Council Decision 74/295/Euratom of 4 June 19741 on the establishment of the 
Joint Undertaking Hochtemperatur-Kernkraftwerk GmbH (HKG); 
Council  Decision  74/296/Euratom  of  4  June  19742  on  the  conferring  of 
advantages  on 
the  Hochtemperatur-Kernkraftwerk  GmbH  (HKG)  Joint 
Undertaking. 

Amendments to the original decisions 

7. 

On 11 July 1983 the general meeting of the Joint Undertaking decided to increase the 
company's subscribed capital. This increase called for an amendment to the statutes 
of the Joint Undertaking. 

The  Joint  Undertaking  also  requested  an  extension  of  the  exemption  from  the 
"Kapitalverkehrsteuer" conferred in 1974 on the assets contributed, in line with the 
abovementioned increase in capital. 

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Considering that: 

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the  amendment  to  the  statutes  had  no  effect  on  the  provisions  governing  the 
Joint Undertaking and was consistent with the development of the project; 

and  extension  of  the  exemption  could  reduce  financing  expenses  and  thereby 
limit the economic risks inherent in such an undertaking, 

in February 1984 the Council adopted two decisions adapting the 1974 decisions to 
the increase in HKG's capital: 

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Council  Decision  84/104/Euratom  of  21  February  1984  approving  an 
amendment to the Statutes of the Joint Undertaking HKG3 

Council  Decision  84/105/Euratom  of  21  February  1984  amending  Decision 
74/296/Euratom  on  the  conferring  of  advantages  on  the  Joint  Undertaking 
HKG4. 

Service record of the power station and reasons for change of objectives 

HKG finally started THTR 300 on 1 June 1987. The power station operated until 29 
September  1988,  when  it  was  shut  down.  During  that  period  operations  were 
interrupted on a number of occasions due to faults. 

Economic, technical and fuel element supply difficulties, combined with problems in 
obtaining authorisation to restart the plant due to financial uncertainties, resulted in 
the  decision,  taken  on  1  September  1989,  immediately  to  shut  down  the  plant 
definitively. 

Since then the Joint Undertaking's objectives have become: shutdown of the reactor, 
core  unloading,  construction  of 
the  safe  enclosure  and  surveillance.  On 
13 December 1989  a  contract  on  controlled  decommissioning  of  the  THTR  300 

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OJ No L 165, 20.6.1974, pp 7 to 13 
OJ No L 165, 20.6.1974, pp 14 to 15 
OJ No L 58, 29.2.1984, p. 35 
OJ No L 58, 29.2.1984, p. 37 

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project  was  concluded  between  the  Federal  authorities,  the  Land  of  North  Rhine-
Westphalia, HKG and its members. This included provisions on the financial aspects. 

Consequent further applications by HKG 

The  tax  advantages  conferred  on  HKG  by  Decision  74/296/Euratom  expired  on 
31 May  1990,  three  years  after  final  acceptance  of  the  power  station  by  the 
undertaking on 1 June 1987. 

By letters of 9 February and 6 March 1990 the members of HKG submitted a request 
for  the  advantages  conferred  to  be  extended  until  HKG's  Joint  Undertaking  status 
expired  and  for  the  advantages  to  be  adjusted  to  the  undertaking's  situation  at  the 
time,  which  had  necessitated  additional  financial  contributions  regarded,  for  tax 
purposes, as contributions of assets. 

HKG  was  implementing  a  programme  for  decommissioning  the  nuclear  power 
station  up  to  the  safe  enclosure  stage  and  proposed,  thereafter,  to  carry  out  a 
programme of surveillance of the nuclear installations concerned. 

The  Council  considered  that  there  was  no  equivalent  to  these  programmes  in  the 
Community  and  that  implementation  thereof  was,  therefore,  important  to  provide 
useful  experience  for  the  nuclear  industry  and  the  future  development  of  nuclear 
energy in the Community. 

The Council also considered it advisable to assist HKG with implementation of the 
programmes  by  lightening  its  financial  burden  and,  therefore,  to  extend  the 
advantages conferred. 
By Decision of 16 November 19925, the Council extended the advantages conferred 
to HKG until the expiring date of the 74/295/Euratom Decision.  

On  30  March  1998  HKG  applied  to  the  Commission  for  extension  of  its  Joint 
Undertaking status for a further period of 25 years. 

The reason given for this request was the importance of the experience which would 
be  gained  from  the  definitive  shutdown  and  decommissioning  operations  to  the 
nuclear power industry in Germany, Europe and worldwide. This view was based on 
the  fact  that  THTR  300  is  the  largest  reactor  of  its  type  in  the  world  and  that  the 
unique configuration of the plant, particularly with regard to the enclosure, provides 
an  unprecedented  opportunity  to  acquire  experience  on  the  results  and  costs  of 
enclosure. 

HKG  added  that  on  13 November 1989  the  Federal  Republic,  the  Land  of  North 
Rhine-Westphalia,  HKG  and  its  members  had  concluded  a  framework  agreement 
with a view to completing the final phase of the THTR 300 project. This framework 
agreement  and  the  amendment  annexed  thereto  on  18 December 1996  govern  the 
phases up to 2009, including the arrangements for financing HKG's activities. 

Germany  supported  HKG's  request  and  stated  that  the  Federal  Government  was  in 
favour of maintaining the tax advantages granted. 

On  the  basis  of  the  information  received  the  Commission  considered  that  the 
arguments  accepted  by  the  Council  in  1992  were  still  valid;  in  particular,  the 
undertaking's activities are still the same and the context in which it performs them is 

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identical.  The  Commission  therefore  proposed  that  the  Council  extend  its  1992 
decision further. 

However as the arrangements concluded between the Federal Republic, the Land of 
North Rhine-Westphalia, HKG and its members for financing HKG's activities apply 
only  for  a  period  up  to  31 December 2009,  the  Commission  proposed  that  the 
Council, in accordance with the period arranged between the German authorities and 
HKG, would approve extension of the Joint Undertaking status and of the advantages 
conferred on HKG for the same period, that is until 31 December 2009. 

On the basis of the Commission proposal the Council prolonged on 7 May 2002 the 
Joint  Undertaking  status  and  the  advantages  conferred  on  HKG  until  31  December 
2009.6  

RECENT DEVELOPMENTS 

By  letter,  dated  26  April  2010,  Hochtemperatur-Kernkraftwerk  GmbH  (HKG), 
Hamm,  asked  for  the  further  extension  of  the  joint-undertaking  status,  established 
originally  by  Decision  74/295/Euratom,  which  has  been  already  once  extended  by 
Council Decision of 7 May 2002, for 11 years with effect from 1 January 1999. This 
extension  should  also  include  the  exemptions  from  land  transfer  tax,  land  tax  and 
trade earnings tax on long-term debt interest, which were granted at the same time. 

HKG applied for the existing status to be extended beyond 31 December 2009 for a 
further  25  years.  In  its  justification,  HKG  provided  in  particular  the  following 
arguments:  

•  With  the  Thorium  High-Temperature  Reactor  (THTR)  prototype  nuclear  power 
plant project in Hamm-Uentrop, HKG had undertaken to carry out industrial-scale 
and  economic  testing  of  high-temperature  reactor  technology  in  the  interest  of 
providing for Germany's future and long-term security of energy supply. 

•  Knowledge gathered from experience in the generation of electricity from nuclear 
energy  cannot  be  confined  to  construction  and  operation  alone.  For  the  sake  of 
completeness, knowledge accumulated from shutdown planning, shutdown itself, 
safe  enclosure operation  and decommissioning (in this  case,  in high-temperature 
reactor technology) have to be included. 

•  In HKG's opinion, knowledge obtained during the period of maintaining the safe 
enclosure  (enclosure  time)  and  subsequent  decommissioning  will  be  of  great 
importance to the nuclear industry in Europe and worldwide, all the more so at a 
time  when  high-temperature  reactor  technology  is  being  taken  up  again  in  the 
work  on  Generation  IV  and  the  different  phases  of  shutdown  are  also  to  be 
included in obtaining an overall picture (Lifecycle Cost). 

•  The  THTR  300  plant  is  the  largest  pebble-bed  reactor  in  the  world  with  a 
reinforced  concrete  reactor  pressure  vessel  (RCRPV)  and  built-in  ceramic 
reflector and liner and hot-gas duct insulation.  

•  The  specific  nature  of  the  safely  enclosed  plant  offers  a  hitherto  unique 
opportunity to calculate the data and costs for a 'quasi-passive' safe enclosure of a 

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OJ L 123, 2002/355/Euratom, 9.5.2002, p.53; OJ L123, 2002/356/Euratom, 9.5.2002, p.54 

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plant with RCRPV, especially in the case of energy costs (ventilation, air drying, 
etc), operating costs, periodic testing and repairs. 

•  HKG expects important findings from the eventual decommissioning of the plant, 
from remote and manual in-core decommissioning work. In addition, stripping out 
the  internal  surface  of  the  RCRPV  (not  all  tendons  can  be  detensioned 
unequivocally) and dismantling of 550 Mg of radiologically contaminated ceramic 
components  installed  inside  the  RCRPV  will  bring  new  knowledge  on  the 
decommissioning of high-temperature reactors. 

•  HKG aims to continue placing these findings too at the disposal of EU Member 

States. 

•  It is still unclear when decommissioning can take place – an important factor here 
is to have a suitable repository prepared and ready to receive – and this is why it is 
asked for the joint-undertaking status to be extended by 25 years. 

•  The  prime  importance  to  the  development  of  the  nuclear  industry  in  the 
Community,  that  is  necessary  for  granting  of  the  status  of  'European  Joint 
Undertaking',  was  already  accepted  with  the  Council  Decision  of  16 November 
1992 on the extension of the advantages conferred on the Joint Undertaking HKG 
– i.e., at the time when the THTR 300 plant was shut down. It was also recognised 
that  no  comparable  case  exists  in  the  Community  for  the  programmes  to  shut 
down  the  power  plant  up  to  the  safe  enclosure  phase  and  for  preserving  and 
monitoring  such  a  'safely  enclosed  plant'  condition.  It  was  also  established  that 
carrying  out  these  programmes  is  leading  to  useful  experience  for  the  nuclear 
industry and the future development of nuclear energy in the Community. 

•  The THTR 300 project will continue to receive substantial aid from the German 
Government and the State of North Rhine-Westphalia. This was laid down in the 
contract  on  controlled  decommissioning  of  the  THTR  300  project  concluded  in 
1989, on the basis of which inter alia the standby operation of the THTR 300 plant 
after 31 December 2009 is being paid for. 

Statement  of  the  German  Government  on  the  request  of  HKG  to  extend  the 
status of joint undertaking 

27. 

In its communication to the European Commission the German government supports 
the  request  of  HKG  to  extend  the  status  of  joint  undertaking  in  particular  for  the 
following reasons: 

•  HKG  is  the  responsible  undertaking  for  the  thorium  high-temperature  reactor 
(THTR) 
the 
in  Hamm-Uentrop.  The  THTR  has  been  since  1989 
decommissioning phase with the goal to eliminate the facility after a longer phase 
of  safe  inclusion  (30  years  are  planned)  completely.  The  time  of  the  complete 
decommissioning  depends  among  other  things  on  the  availability  of  a  final 
disposal  facility  for  highly  radioactive  waste,  which  in  view  of  the  uncertain 
future of Gorleben to-time is not foreseeable. 

in 

•  It can be assumed that the phase of safe inclusion at the THTR will go beyond the 
period  planned  at  present.  This  phase  is  financially  ensured  by  an  agreement 
between  the  Federal  State,  the  Land  NRW  and  HKG.  The  running  time  of  this 
financing arrangement is however limited to 31 December 2017. 

•  The  unusually  long  phase  of  safe  inclusion  of  the  THTR  to  be  expected  and,  in 
particular  the  later  decommissioning  work  concerning  the  concrete  reactor 

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pressure  vessel  (SRB)  will  surely  provide  new  knowledge  about 
the 
decommissioning of such facilities. Also the decommissioning work related to the 
SRB,  for  which  up  to  now  no  practical  experience  is  present,  would  represent  a 
substantial  cost  element.  Before  this  background  a  further  commitment  of  HKG 
and  its  associates  is  essential  as  well  as  an  extension  of  the  status  of  a  joint 
undertaking. 

However the extension should only be conceded until 31 December 2017 and not for 
further  25  years  as  requested  by  HKG,  since  the  German  financing  agreement  is 
limited to this date. 

The  Federal  Government  argues  for  such  a  lifetime  limitation,  as  it  sees  no  reason 
uncoupling of the status of a joint undertaking from the running times of the German 
financing arrangements.  

Before this background the Federal Government endorses the extension of the status 
of the HKG as a joint undertaking until 31 December 2017. 

BUDGETARY IMPLICATION 

No budgetary implication for the EU budget. 

CONCLUSIONS 

The Commission considers that the arguments accepted by the Council in 2002 for 
the extension of HKG's Joint Undertaking status and advantages are still valid today; 
in particular, the undertaking's activities are still the same and the context in which it 
performs  them  is  identical.  The  Commission  therefore  considers  that  the  Council, 
after  having  approved  the  extension  of  the  joint  undertaking  status,  should  also 
extend its decision concerning the advantages conferred to HKG accordingly. 

The  arrangements  concluded  between  the  German  Federal  Republic,  the  Land  of 
North Rhine-Westphalia, HKG and its members for financing HKG's activities apply 
only for a period up to 31 December 2017. 

The Commission therefore proposes that the Council, in accordance with the period 
arranged between the German authorities and HKG, approves also the extension of 
the advantages conferred on HKG until 31 December 2017. 

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2011/0064 (NLE) 

Proposal for a 

COUNCIL DECISION 

on extension of the advantages conferred on the  
Joint Undertaking Hochtemperatur-Kernkraftwerk GmbH (HKG) 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard  to  the  Treaty  establishing  the  European  Atomic  Energy  Community,  and  in 
particular Article 48 thereof, 
Having regard to the proposal from the Commission7, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

By Decision 74/295/Euratom8 the Council established Hochtemperatur-Kernkraftwerk 
GmbH (HKG) as a joint undertaking, within the meaning of the Treaty, for a period of 
25 years as from 1 January 1974. 
By  Decision  2002/355/Euratom  of  7  May  20029  the  Council  extended  the  Joint 
Undertaking  status  granted  to  Hochtemperatur-Kernkraftwerk  GmbH  (HKG)  for 
eleven years with effect from 1 January 1999 until 31 December 2009. 
By  Decision  74/296/Euratom10  and  its  Decision  of  16  November  199211  the  Council 
conferred  on  HKG  a  number  of  advantages  listed  in  Annex  III  to  the  Treaty,  for  a 
period of 25 years as from 1 January 1974. 
By Decision 2002/356/Euratom of 7 May 200212, the Council extended the conferred 
advantages on HKG, for a period of 11 years until 31 December 2009. 

(5)  With  letter,  dated  26  April  2010,  Hochtemperatur-Kernkraftwerk  GmbH  (HKG), 
Hamm,  asked  for  the  further  extension  of  its  tax  advantages  for  the  new  period  for 
which it had been granted Joint Undertaking status. 

(6) 

(7) 

(8) 

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The current objective of HKG is to implement a programme for decommissioning the 
nuclear  power  station  up  to  the  safe  enclosure  stage  and,  thereafter,  to  carry  out  a 
programme of surveillance of the enclosed nuclear installations. 

There is no equivalent to these programmes in the Community since, to date, no high-
temperature reactor has been shut down definitively in the Community. 

Implementation of these programmes is therefore important since they provide useful 
experience and the future development of nuclear energy in the Community, notably 
as regards the decommissioning of nuclear installations. 

OJ C , , p. . 
OJ L 165, 20.6.1974, p.7. 
OJ L 123, 9.5.2002 p. 53 
OJ L 165, 20.6.1974, p. 14. 
OJ L 352, 02.12.1992, pp. 9 to 12 
OJ L 123, 9.5.2002 p. 54 

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(9) 

therefore  be  assisted  with 

HKG  should 
the  programme  for 
decommissioning  the  nuclear  power  station  up  to  the  safe  enclosure  stage  and  the 
programme  of  surveillance  of  the  enclosed  nuclear  installations,  by  lightening  the 
financial burden. 

implementing 

(10)  Arrangements  for  financing  HKG's  activities  have  been  agreed  between  the  Federal 
Republic of Germany, the Land of North Rhine-Westphalia, HKG and its members for 
the period up to 31 December 2017. 

(11)  The advantages conferred on HKG should therefore be extended for the same period 
as the extension of its Joint Undertaking status, that is until 31 December 2017. 

HAS ADOPTED THIS DECISION: 

Article 1 

The  Member  States  hereby  extend  for  eight  years  with  effect  from  1  January  2010  the 
following  advantages  listed  in  Annex  III  to  the  Treaty  conferred  on  the  Joint  Undertaking 
Hochtemperatur-Kernkraftwerk GmbH (HKG): 

1. 

2. 

Under paragraph 4 of the abovementioned Annex, the exemption from the 
Grunderwerbsteuer (tax on the acquisition of immovable property); 

Under paragraph 5 of the abovementioned Annex: 

the exemption from Grundsteuer (land tax); 

the exemption from that part of the industrial or commercial profits tax which is 
levied, pursuant to Article 8, point 1 of the Gewerbesteuergesetz (trade tax law), on 
the interest due on long-term debt. 

Article 2 

The conferment of the advantages listed in Article 1 on HKG is subject to the condition that 
the  Commission  shall  have  access  to  all  the  industrial,  technical  and  economic  information, 
including  that  relating  to  safety,  acquired  by  HKG  in  the  course  of  implementation  of  the 
programme for decommissioning the nuclear power station up to the safe enclosure stage and 
of the programme of surveillance of the enclosed nuclear installations. This obligation extends 
to  all  the  information  which  HKG  is  entitled  to  pass  on  in  accordance  with  the  contracts 
concluded  with 
information  must  be 
communicated to it, as well as the manner in which such communication shall be made and 
shall ensure that this information is disseminated. 

it.  The  Commission  shall  determine  which 

This Decision is addressed to the Member States and to HKG. 

Done at Brussels,  

Article 3 

For the Council 
The President  

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