New nuclear risks in Ukraine - EBRD urged not to back lifetime extensions under the guise of 'safety'

The European Bank for Reconstruction and Development is expected to take a decision this month on whether or not to provide a EUR 300 million loan for a nuclear power plant Safety Upgrade Programme (SUP) in Ukraine. Bankwatch and other environment groups are questioning the logic of the proposed SUP as it will result in some of Ukraine’s old nuclear units continuing to operate for another 20 years.

This article is from Issue 55 of our quarterly newsletter Bankwatch Mail

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In recent weeks, Alexander Shavlakov, the technical director of Energoatom, the state nuclear operator, acknowledged the reality of the programme, telling a meeting in February of the trade union of Ukrainian nuclear industry workers: “Without the Safety Upgrade Programme, [nuclear] units’ lifetime extension is out of the question. We should be conscious of this.”

The ‘nuclear safety’ billing of the SUP appears to be blinding EBRD decision-makers to the full implications of the proposed investment, although discussions and negotiations around the deal have been taking longer than expected – the EBRD board date for the decision is now scheduled for March 12, some six months later than planned.

Ukraine's nuclear extension plans and Europe's complicity

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For Iryna Holovko, a Bankwatch energy campaigner in Ukraine, there is a fundamental issue at stake: “Would the proposed EBRD loan help to guarantee the safe operation of Ukraine’s 15 operating nuclear units, 12 of which are designed to finish operating by 2020? Our answer is ‘no’. The SUP has got to be exclusively geared to safety measures, including the decommissioning of old reactors, not prolonging their lifetime.”

Chief among the concerns of campaigners is that the SUP has not been designed to guarantee the safe operation of Ukrainian nuclear units after the expiration of the original design life.

As Holovko explains, the option – clearly a very realistic option under Energoatom plans – of plant operations exceeding the design period has not been assessed: “In the main ecological assessment report prepared for the SUP, only impacts within the design lifetime were analysed. To take the specific case of the South Ukrainian Unit 1 that expires this year, its potential environmental impacts beyond the closure date have been deemed by Energoatom to be ‘non-significant’ because ‘in previous years of operation no significant impacts were observed’. This is a highly irresponsible approach to nuclear safety.”

The whole concept of nuclear safety in Ukraine remains highly contentious. The final decision on whether to close or extend specific nuclear operations lies with the state nuclear regulating authority (SNRIU) based on periodic safety review results. The capability, though, of SNRIU to base its decisions purely on safety considerations remains far from certain – currently no nuclear decommissioning plans exist, the only plan being to extend the lifetime of nuclear units.

Another major question mark hanging over the SUP deal concerns financing – principally whether Energoatom is in any position to contribute the required 60 percent of the programme’s overall funding.

Following nuclear ‘stress-tests’ implemented in 2011, the cost of Ukraine’s SUP rose to EUR 1.45 billion. In tandem with a loan from Euratom, the EBRD is expected to provide up to 40 percent of the project costs. The remainder should be covered by Energoatom’s own resources.

However falling tariffs announced in January this year for Energoatom’s electricity will undermine the company’s ability to pay its end of the SUP deal. Already this year Energoatom has acknowledged to SNRIU that the reduced tariff rate will not allow for the implementation of all the planned SUP measures for 2013. The company has let it be known that in order to implement the SUP in 2013 it requires 3 billion hryvnas (EUR 286 million), yet under this year’s tariff it will generate only 620 million hryvnas (EUR 59 million).

This is not the first time that safety modernisations at Ukrainian nuclear plants have been jeopardised: a previous modernisation programme saw the implementation of only 80 percent of 253 pilot measures and 37 percent of 472 adopted measures.

Given these highly uncertain factors hanging over the SUP, it is incumbent on the EBRD’s board of directors to say no to the loan as it is currently conceived.

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Background information on the Ukrainian nuclear power plant Safety Upgrade Programme is available at: