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European Commission's
Nuclear Package
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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 project’s 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 panel’s 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.
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