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Final (?) decision on K2/R4 next week

Nuclear Monitor Issue: 
#558
23/11/2001
Article

(November 23, 2001) The Board of the European Bank for Reconstruction and Development (EBRD) is to take a (final?) decision on the infamous K2/R4 project on 29 November. On 7 November, the President of the EBRD Jean Lemierre made a recommendation that the Board of Directors of the EBRD give final approval to a loan to finance the completion of K2/R4, two Soviet-designed nuclear reactors in Ukraine. The Board meeting is scheduled for 29 November.

(558.5344) WISE Amsterdam - Bankwatch and several other NGO's are questioning Lemierre's assumption that the conditions (see box) that were approved last year by the EBRD Board (see WISE News Communique 540.5226: "EBRD approves K2/R4 loan - campaign continues") are completely met.

 

CONDITIONS FOR BOARD APPROVAL

  • Closure of Chernobyl.
    Obviously met although not to be seen as a sign of good will; the plant's license expired in November 2000 and according to the nuclear regulator it could not be prolonged anyway
  • Improvement of nuclear safety standards in Ukraine.
    Although the status of the nuclear regulator was enlarged from an administration within the Ministry of Ecology to the State Nuclear Regulatory Committee it has not led to any practical results or changes. Not met
  • Resumption of the IMF Extended Fund Facility (EFF) for Ukraine.
    On 20 September 2001 the IMF completed the reviews under the EFF for Ukraine. As a result the EFF funding was resumed. On the other hand the Ukraine does not meet the conditions set by other financial institutions. The World Bank is waiting for Ukraine to raise electricity tariffs and continue privatization of energy distribution companies before making the first installment of a Structural Adjustment loan.
  • Confirmation in writing from each of the institutions expected to provide co-funding.
    Funds for the completion of K2/R4 are supposed to come from Energoatom (project sponsor), EBRD, Euratom, the Russian government, UK ECA, Czech ECA, French ECA, Spanish ECA, Swiss ECA and the US Ex-Im bank. Until now the Ukraine has been on the blacklist of most ECAs. In July 2001, Ukraine reached an agreement with the Paris Club of ECAs, which was expected to come into force on 21 November "provided that Ukraine has paid its debts to participating creditor countries on amounts due by October 2001". At the time of writing we have no further details on the status of this agreement.

Source: www.bankwatch.org

According to Bankwatch "the project is being pushed to support a couple of moribund nuclear companies, while the Ukrainian public will have to take the burden of payment and continue to be threatened by the poor level of safety of other nuclear plants in our country. Although the reactors will be partially completed with Western technology, the reactors would not be licensable in western countries".

The greatest concerns are on the safety of the proposed reactors, the actual effectiveness of the newly formed State Nuclear Regulatory body, the assurance that enough funding will be provided to ensure that the project can be completed in the safest possible manner, the lack of real need for greater energy output in the Ukraine and the continued public opposition to the project.

The most convincing argument against this project is that it is neither needed nor wanted. The EBRD itself has recognised that Ukraine's main problem is with energy efficiency and not with output. The country got through last winter without Chernobyl's nuclear output, or using an EBRD loan for the purchase of fossil fuels to supplement the expected energy shortage. The day after Chernobyl was permanently shut down, President Kuchma, in a public meeting, stated that "Ukraine has enough generating capacity." The latest public opinion poll shows that only 11% of the Ukrainian public supports the project.

Bankwatch has released a report in which it proves that the 4 conditions have not been met. The report points out glaring inconsistencies in the Bank's conditions for loan approval and what has actually been achieved in Ukraine. The report is available on their web site in PDF format.

Source: Bankwatch press releases, 9 and 19 November 2001

Contact: Olexi Pasyuk, CEE Bankwatch Network, PO Box 89, 01025 Kiev, Ukraine
Tel.: +380 44 238 6260; mobile: +380 50 5711684
Email: opasyuk@bankwatch.org
Web: www.bankwatch.org/k2r4