Euratom funds black hole

Kiev/Prague, July 25, 2002 --- The European Commission has
announced a tender to support a project which is unlikely ever to be completed. For more than five years, the European Commission has been considering co-
supporting the completion of outdated Soviet-designed nuclear reactors in Ukraine, giving the lead decision-making role to the European Bank for Reconstruction and Development (EBRD). In December 2001, the EBRD's Board of Directors decided not to support the project, which means that the current call for tenders from the EC Tacis program, ‘Legal advice for Euratom loan to K2R4', comes as a surprise for observers.

The controversial nuclear project in Ukraine involves the
completion of nuclear reactor units Khmelnitsky 2 and Rivne 4 (known as ‘K2R4'), and has been heavily criticised on economic, safety, environmental and social grounds. However, following Ukraine's blackmailing not to close Chernobyl (the site of the nuclear catastrophe), the EBRD Board made a preliminary decision that its support of the loan would be subject to numerous conditions. Despite the fact that the majority of the EU countries on the EBRD Board did not support the project, the European Commission has voted in favour of a Euroatom loan.*

The EBRD's support for the project was conditioned on
economics, safety and confirmation of financial support by all involved institutions.** When Ukraine failed to meet these conditions, the EBRD refused to approve the K2R4 loan. Euratom was also expected to reject a loan, since it was linked to the same conditions and is not sufficient on its own to complete the project.

"It is surprising to see the European Commission wasting its money on a controversial project which was not able to find sufficient financial support to ever be completed," said Olexi Pasyuk of the CEE Bankwatch Network. "The EC through its Tacis program has already invested over EUR 30 million for this project, expecting it to be completed long before the year 2000. Ukraine should use its money to finance measures for improving efficiency of energy use and production, rather than figuring out how to get taxpayers to repay an uneconomic Euratom loan."

The CEE Bankwatch Network is calling on the Commission to
cancel the tender for ‘Legal advice for Euratom loan to K2R4' since its decision to release the Euroatom loan is not valid due to the unwillingness of other donors to participate in the project. The EC should instead work for improving nuclear safety and energy efficiency in
Eastern Europe.

* Vote at the EBRD Board on 7 December 2000 – Against:
Austria, Netherlands; Abstained: Sweden, Germany, Italy, Spain, Ireland, Denmark, Belgium; In favour: Luxembourg, Finland, UK, France, Greece and Portugal.

** Funds for the completion of the K2R4 units were supposed to come from the following sources: Energoatom (project sponsor), EBRD, Euroatom, the Russian government, UK ECA (ECGD), Czech ECA, French ECA (COFACE), Spanish ECA (CESCE), Swiss ECA (ERG), US (ExIm Bank).

For more information please contact:
Olexi Pasyuk, CEE Bankwatch Network
tel.: +380 44 238 6260
mobile: +380 50 5711684
e-mail: opasyuk@bankwatch.org
http://www.bankwatch.org/k2r4

--
International Energy Coordinator
CEE Bankwatch Network
PO Box #89, 01025, Kiev, Ukraine
tel: +380 44 2386260
fax: +380 44 2386259
opasyuk@bankwatch.org
http://www.bankwatch.org

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