Media

Press Release:

K2R4 NUCLEAR PROJECT WITHDRAWN FROM EBRD

Kiev, 30 November, 2001 - Late evening yesterday at the Board of Directors of the European Bank for Reconstruction and Development (EBRD) the Ukrainian representatives requested that the Board not consider the loan for the completion of two nuclear power plants in Ukraine. "Bankwatch is happy to see this move, as taxpayers' money should not be used to support unsafe 
and uneconomic nuclear power plants," said Petr Hlobil of the CEE Bankwatch Network.

The CEE Bankwatch Network believes that the Ukrainian withdrawal of the project creates a need to intensify the EBRD's and other financial institutions' investment into the Ukrainian Energy sector. "We urge the EBRD and the World Bank to fulfil their joint Energy Efficiency Plan for Ukraine prepared in 1998 that has thus far been ignored by those institutions," added Petr Hlobil.

The completion of the reactors Khmelnitsky 2 and Rivne 4 (known as K2/R4) got preliminary approval in December of last year, in reaction to the blackmailing of the international community by the Ukrainian President Kuchma, who threatened them with the continued operation of the Chernobyl nuclear power plant.

Parallel to the withdrawal was President Kuchma's negotiations with Russian President Vladimir Putin on Russian participation in the completion those nuclear reactors. "Ukrainian NGOs welcome the fact that the EBRD is not going to finance those reactors, but we know that it is not the end of this bitter tale," said Yury Urbansky, from the National Ecological Centre of Ukraine. 
"President Kuchma is trying to increase Ukrainian dependence on Russia."

The CEE Bankwatch Network believes that the EBRD has an important role in Nuclear Safety issues, but construction of nuclear power plants should be excluded from their energy policy. The Bank should instead use its experiences and technical knowledge for the closure and decommissioning of nuclear facilities in Eastern Europe. Also, the EBRD could be involved in the management of special funds for short term stoppages on radioactive materials that are currently in critical conditions in 
places like Novaya Zemlya. This should include nuclear-powered submarines, reactors, and containers with radioactive materials that have been dumped into the sea.

For more information please contact:

Yury Urbansky, National Ecological Center of Ukraine, mobile: +420- 608-169 001 or 
Petr Hlobil, CEE Bankwatch Network, mobile: +420-603-154 349
http://www.bankwatch.org/k2r4

Notes:

(1) The CEE Bankwatch Network is an international non-governmental organisation (NGO) with member organisations 
currently from 12 countries of the CEE and CIS region. The Bankwatch mission is to prevent environmentally and socially 
harmful impacts of international development finance, and to promote alternative solutions and public participation.

(2) On the 7 th of December,2000,the EBRD Board gave preliminary approval to a loan of USD 215 million to complete 
nuclear reactors in Ukraine, with a total cost of USD 1,48 billion.

Media Clips:

UKRAINE SEEKS RUSSIA'S HELP IN COMPLETING NUCLEAR REACTORS
Moscow, November 29

Ukrainian President Leonid Kuchma said Thursday that his country would rely on Russia's help to complete construction of two nuclear reactors, turning its back on Western offers of assistance.

Previously, Ukraine was counting on support from European
Governments and institutions. The European Bank for Reconstruction and
Development was expected to lend dlrs 215 million for the project.

Kuchma said the conditions imposed by the EBRD were "unacceptable." 

"It amounts to eternal slavery for Ukraine," he said at a news conference in Moscow.

Among the main conditions attached to the EBRD loan was the creation of a new independent institution to oversee nuclear safety, a requirement Ukraine has not fulfilled.

Ukraine had expressed dissatisfaction over delays in the EBRD assistance and the two sides disagreed as to how much the project should cost. Western experts estimate completion costs at $1.5 billion. Ukrainian specialists say only dlrs 500 million to $600 million is be needed.

Kuchma, who is in Moscow to take part in Friday's summit of the Commonwealth of Independent States, said an agreement about Russian participation in the construction was reached during his meeting Thursday with Russian President Vladimir Putin.

Construction of the reactors at the Rivne and Khmelnytskyi nuclear plants was started in the Soviet era and later frozen. Ukraine appealed for help to complete them to make up for the energy lost when the Chernobyl nuclear power plant was closed in December.

MOSCOW - Ukrainian President Leonid Kuchma dismissed as unacceptable yesterday terms offered by the EBRD to complete nuclear reactors intended to replace the closed Chernobyl power station.

"What is being offered by the European Union, or the entity which represents the EU, the U.S., Canada and Japan - the European Bank for Reconstruction and Development - the terms are unacceptable for Ukraine," Kuchma told a news conference.

"We shall not accept them by any means, because they mean eternal servitude."

The EBRD approved in principle a $215 million loan to help make up the four percent of its generating capacity lost by the closure of Chernobyl, site of the world's worst civil nuclear disaster in 1986.

The money is to be spent on completing two reactors in western Ukraine at Rivne and Khmelnitsky.

But the bank set tough conditions for the loan, making it contingent on a resumption of aid from the International Monetary Fund which was approved two months ago. It also demanded improving safety at Ukraine's four nuclear power stations. The final agreement is to be signed by December 7.

But EBRD spokesman Jeff Hiday told Reuters in London that the bank had received a letter from Ukrainian Prime Minister Anatoly Kinakh saying that Kiev would not sign the deal by the deadline but wished to continue talks.

"The main thing is they want to review the requirement to adhere to timetable and targets for raising energy tariffs," Hiday said.

Kuchma, in Moscow for a summit of ex-Soviet republics in the Commonwealth of Independent States, said Ukraine would cooperate more closely with Russia in nuclear sector development and restructuring.

"It is no secret that all nuclear power stations and nuclear reactors are of Russian production," he said.

"That is why we shall not take any action without Russian participation. All fuel used in nuclear reactors is Russian. If we abandon it, a number of towns...will cease to exist."

Kuchma said closer Ukraine-Russia nuclear cooperation would be one of the main subjects for discussion between Kinakh and Russian Prime Minister Mikhail Kasyanov during the summit and a government meeting at the start of December.

"Under the Soviet Union, we produced missiles and used no foreign materials, because we knew there might always come a time when we would no longer be able to get foreign materials," Kuchma said.