K2R4





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For over a decade the EU and G8 have been proposing to assist Ukraine with the completion of two nuclear reactors, Khmelnitsky 2 and Rovno 4 (K2R4) in Ukraine. The European Bank for Reconstruction and Development (EBRD) is spearheading the projectís development. If approved, the project will be the first time that an international financial institution has funded a nuclear power project. The project has been plagued with problems and no final decision on funding the project has been taken by the EBRD and its co-funders, despite the commissioning of 5 economic assessments, 3 safety audits, 2 environmental impact assessments and countless meetings and discussions. In particular, when the EBRD commissioned in 1995 an independent panel of experts to review the economics, the panel recommended that the project should not proceed. However, pressure from the Ukraine Government and G8 resulted in the rejection of the panelís findings. 2 reports are available on this subject:
Financial and Economic Alchemy
and From Bad to Worse

The project was given provisional financial approval by the EBRD's Board of directors in December 2000. The decision was politically motivated as the funding was linked to the closure of the Chernobyl nuclear power plant also in December 2000. The provisional approval was conditional upon the Ukrainian Authorities meeting the financial due diligence requirements within 12 months. In November 2001 on the morning of the EBRD board meeting expected to give final approval to the project the Ukrainian authorities asked for changes in the conditionalities, including a reduction in the required increase in electricity tariffs - needed to pay back the loan. Consequently, the project was not approved.

Since then every six months or so a new rumour circulates the Kiev media that the EBRD are reconsidering funding the project. The latest suggestion is that during the summer of 2003 a new financing package will be constructed.