Interview with Mr. Tarik Choho, Head of AREVA’s International Commercial Organization
(interviewed by Auxence Gros-Borot for the SFEN JG)
Can you please explain to us what your job consists of?
I am the head of AREVA’s International Commercial Organisation that numbers around 800 people across the 5 continents and covers all of AREVA’s core businesses: nuclear fuel, reactor design and construction, operating services and renewable energies.
Based in Paris, at AREVA’s headquarters, my goal is to bring the right sales people to the right negotiation table, so that the AREVA Group meets its commercial objectives. These kinds of decisions, taken in collaboration with AREVA’s business groups and executive management, require regular follow-up and adaptation. I am directly involved in some key negotiations, such as those related to new-build or other sensitive issues. I also promote innovation within the Group, so that we can continue to offer our customers new products and services to help them reach their own objectives and meet their own challenges. My goal is also to promote extended AREVA expertise and increase the sale of innovative global offers that answer all our customer needs - as this is their main priority.
What has been your career path to date?
I come from a very technical background and gradually evolved towards more commercial positions, but always in the energy business. I started my career at Gaz De France, where I worked for seven years. I entered the nuclear business when I joined AREVA in 1996 as a Project Manager in the United States. I stayed there 10 years to work on design, project management, and the installation and commissioning of back-end facilities. Later on, I moved towards more sales-oriented positions, respectively in nuclear logistics, nuclear fuel enrichment and fabrication and mining.
In 2011, I was appointed Executive Vice President in charge of sales in Europe, Middle East and Africa, and Vice Chief Commercial Officer. In 2013, I became Chief Commercial Executive Officer and member of AREVA’s Executive Management Board, which supports the Executive Board with the carrying out of its mission.
I am very proud to contribute today to the destiny of such a large commercial group. AREVA is a leader in this historical field, the nuclear industry, and also has great ambition when it comes to renewable energies. This makes it a very thrilling and interesting Group to work for.
I believe that it is a good idea for young professionals interested in this industry to start with a technical job, as this will teach them a lot. And it is crucial in this demanding sector to understand the technical issues. It will also help them to build up credibility and legitimacy for later managing large-scale industrial projects such as nuclear new build.
Negotiations and commercial agreements for nuclear reactors are surely more complex to conclude than those for simpler, cheaper and… non-nuclear products! Can you tell us what is at stake in your everyday negotiations?
There are two sorts of businesses at AREVA, roughly divided between long-term agreements (around 10 years) and short-term ones. The first ones are very specific to the nuclear business, especially dismantling, new fuel and reactor builds, while the second ones are quite similar to sales we find in other industries, where price is the key parameter. With regards to nuclear installations, AREVA’s main priorities are safety, performance and quality, while making sure that our offers remain competitive.
In addition, we have to deal with new types of negotiations today as customers ask more and more for global packages for their nuclear installations, integrating reactor financing, fuel supply, the training of operators, etc. This is where AREVA has a strong card to play, as we are one of the only nuclear Groups to be able to offer customers innovative global offers covering most of their needs. We also accompany them throughout their nuclear projects, which involve many different aspects: design and construction of nuclear reactors, fuel supply, used fuel management, plants maintenance and services, trainings, development of local suppliers, etc.
Finally, I personally value trust between negotiators, as trust is the only way to succeed in this kind of sale. The multicultural aspects of the nuclear business also play a key role, and the worldwide presence of the AREVA Group is of great help and very rewarding in this context.
Who participates in new build negotiations?
For every large project like a new build venture a team is set up and led by an Offer Director. These teams bring together a lot of people since there is a lot of work to do in relation to technical, licensing, planning, financing and legal aspects. To prepare the offer the team also regularly meets the customer and follows AREVA’s commercial procedures, which are clearly defined and structured with different steps and mandatory milestones that have to be validated by dedicated Offer Committees in order to move the negotiations forward.
When we approach the time for signing the contract fewer people participate in the final negotiations. Each contract is signed following a thorough review by AREVA’s financing, legal and commercial departments and the granting of a written mandate to proceed with the signature.
What is the role of local companies in the construction of a nuclear power plant?
Local companies play a key role in new build projects and AREVA is deeply committed in supporting and developing, when necessary, local industries and high-skilled jobs. This localisation strategy, systematically deployed by AREVA with every project, allows the Group to benefit from a sound local supply chain, to contribute on-time and on-budget to delivery of the projects and maintain their competitiveness. It also contributes to the development of a qualified local industry that will be able to ensure the operation and the maintenance of the nuclear installations in the long-term. Finally, it allows local companies, once they are part of our global supply chain, to have access to a maximum amount of commercial opportunities - not only on their domestic markets, but also worldwide.
For this AREVA has put in place different mechanisms:
A rigorous identification and qualification programme to identify new suppliers and make sure they answer to the very stringent nuclear requirements
Partnerships between experienced suppliers and newcomers so as to help the latter to ramp-up and adapt to the nuclear industry standards
Supplier training programs to support them with their ramp-up.
Before selling a product customers have to be interested in it. What kind of branding do you do for nuclear reactors?
AREVA is the world’s leader in the nuclear business, and behind the AREVA brand are more than 50 years of experience and a unique expertise acquired across the entire nuclear industry, including the whole fuel cycle (mining, conversion, enrichment, fuel fabrication and fuel recycling), the design and construction of nuclear reactors and the associated operating services. AREVA provides services to 346 reactors out of the 440 in operation worldwide and work with 95% of the nuclear utilities. New builds are emblematic projects and draw the attention of the media, but 85% of the group’s turnover comes from recurring business i.e. that which excludes new-build projects.
AREVA offers two pressurised water reactors (PWR), the EPR reactor and the ATMEA1 reactor (co-developed with our partner Mitsubishi Heavy Industries). We mainly promote GEN III design, with its high level of safety and the savings in fuel consumption that it offers. We also insist on using the feedback and knowledge that AREVA has accumulated following decades of experience building and servicing hundreds of reactors worldwide with technical skills developed in collaboration with historical partners (EDF and the CEA) and in-house international industrial bases and technical centres, in France, Germany and the USA.
It seems that momentum for nuclear new build is growing, with four ATMEA1 reactors in Turkey and two EPR reactors planned at Hinkley Point in the UK. Both are reactors designed by AREVA (jointly with MHI for the ATMEA1 reactor), though more and more partners are involved, especially for financing. What are the challenges you face with such projects?
As regards Hinkley Point in the UK, AREVA has been chosen by EDF to build the nuclear steam supply systems (NSSS), including the instrumentation and control (I&C) system for the first two EPR reactors at Hinkley Point. In 2012, AREVA and EDF signed a Memorandum of Understanding relating to the delivery of the NSSS and the I&C and in March 2013 the British Government granted EDF final planning permissions for the project. We are now waiting for the decision of the European Commission regarding the mechanism put in place in the UK to attract investment in nuclear energy and we hope that the project will be launched soon.
Regarding the project at Sinop, in Turkey, the Turkish and Japanese Prime Ministers signed in October 2013 a framework agreement for the Sinop nuclear power plan, establishing the cooperation between the countries, which is at the final stage before a commercial contract. Four ATMEA1 reactors are to be built there. Construction is expected to start in 2017, and power generation for the first unit in 2023. Financing, planning and industrial organisation have still to be defined before the commercial contract can be signed, and we are now preparing the final offer.
What are the perspectives for new-builds in the medium and long term?
Nuclear is and will remain an important component of the world’s energy mix for years to come because we still face the same challenges: if global development keeps its current pace energy demand will be doubled by 2050; furthermore, there is a global objective to reduce greenhouse emissions by 50% by the same date. In addition, the depletion of fossil fuel resources and geographical uncertainties, combined with the need for countries to have energy sources at stable and predictable cost, lead experts to assess that the future of the nuclear energy remains secure. According to the International Energy Agency, nuclear capacity is to increase by about 50% by 2035, which represents an annual growth of 2.2% and a construction effort of about 300GW by 2030 i.e. between 200 and 300 new reactors.
As for AREVA, we have already been chosen for 2 EPR reactors at Hinkley Point in the UK, with an option for 2 additional EPR reactors at Sizewell II – also in the UK - and the 4 ATMEA1 reactors at Sinop, in Turkey.
Discussions are also progressing well for the construction of 2 additional EPR reactors in Taishan (China), Taishan 3 and 4. Poland, Saudi Arabia and the Republic of South Africa are also willing to develop a nuclear industry and we are waiting for the calls for bids to be announced. We have also good prospects in India, and in other countries where technology selection is still ongoing: Brazil, Vietnam and Malaysia.
How important is knowledge transfer to younger generation is?
Knowledge transfer is of paramount importance, not only for the company as a whole, but also for my teams and me. AREVA has always paid particular attention to knowledge transfer, as nuclear is a very specific and specialized sector. Knowledge transfer between new recruits and our experienced staff is essential to ensure the smooth continuation of our projects and the further development of our technologies.
This is a topic that I personally follow closely for my own teams in all our regions as I am convinced that it is one of the keys to mastering regional cultures, establishing long-lasting relationships with our customers and being successful commercially.
For the Atoms for the Future 2014 conference, which will be organized by SFEN Young Generation from 13-16 October 2014, you will participate in a panel discussion in front of 250 young nuclear professionals. What does the 2014’s theme – Design, Licensing & Construction of Nuclear Power Plants – mean to you?
Our industry is simply fascinating. Strong technical skills are a must if we want this industry to thrive and the local population to trust us.
The nuclear business is also fascinating because, however rigid it might seem, with all the safety requirements we must abide by, it is actually a forum for innovation where individual effort and ideas are essential to building an ever more secure and sustainable industry and to developing the low-carbon technologies of the future.