Scientists give cool reaction to nuclear loan

Date: 30/01/1997

By Mark Turner

AN INDEPENDENT report commissioned by the European Bank for Reconstruction and Development (EBRD) threatens to block a 1-billion-ecu loan to Ukraine for the completion of two nuclear reactors.

The draft report from the EBRD panel states that completing the two reactors is not the cheapest way to solve Ukraine's energy problems - contravening the guiding principle that loans can only be made to finance the most economical solution.

If its findings are accepted by the European Commission, the EBRD and Euratom (the Union's nuclear arm) would have to shelve plans to fund the project - despite the EU's political commitment to the loan.

“If it is not the least-cost approach, that is the end of the story,” said an EBRD official.

Withdrawal of the loan offer would be a major embarrassment both for EU governments, which gave their support to the funding at a G7 meeting in April last year, and for the Commission, which has already pumped more than 30 million ecu of Tacis money into preparing the reactors for completion.

Commission officials are refusing to comment on the study's contents “until work has been finished”, even though Professor John Surrey, who headed the research panel which compiled the report, said this week: “Our work was finished by 20 January.”

It is understood that the Commission has raised questions over the methodological approach taken by the panel and alleged splits within its ranks.

Until these questions have been answered, say sources, the report will not be accepted by the institution.

But Professor Surrey said: “We very much believe we have completed our work to the highest standards.”

First indications are that completing work on the two reactors would cost a total of about 1 billion ecu, of which 300 million ecu would come from the EBRD and 365 million ecu from Euratom. The rest would be supplied by the Ukrainian government and export credit agencies.

Work on finishing the reactors would almost certainly be carried out by European nuclear power firms, and a decision to withdraw the money would be bound to provoke a furious reaction from the industry.

The G7 governments agreed last year that they would find the money to complete Ukraine's Khemelnitsky 2 and Rovno 4 nuclear reactors as part of a deal to close down the remaining operative units of Chernobyl by the year 2000.

Although Unit 4 of the power station exploded in 1986, causing countless casualties, two of Chernobyl's remaining units currently supply 5&percent; of Ukraine's power needs. These are felt to pose a continuing risk to the eastern European region, but without them the country's ongoing energy crisis could get even worse.

Ukraine originally favoured building conventional power stations to compensate, but the West - fearing this would lead to greater reliance on Russian fuel supplies - advocated the nuclear option.

A backtrack now would not be without precedent - similar plans for the Mohovce plant in Slovakia were shelved on similar grounds.

One of the main factors influencing the panel's conclusions was that Ukraine already has 100&percent; surplus generating capacity. The country's severe shortages of electric power hinge on an inability to purchase fuel rather than a lack of power stations.

This adds to claims by 'green' groups and the European Parliament that since Ukraine is the least energy efficient country in the world - using seven times more energy per unit of gross domestic product than the EU - international funds would be better spent on plugging gas leaks and improving efficiency.