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Proposed US ExIm Bank loan to Czechs

Nuclear Monitor Issue: 
#389
08/04/1993
Article

(April 8, 1993) The following is an edited version of a letter sent to the President of the US Export Import Bank (currently a vacant position). Some of the information on the technical faults of the reactor, alternative energy solutions for the Czech Republic, an appeal to the Clinton "no new nukes" campaign promise and more circumstantial evidence about the Klaus/Westinghouse scandal have been edited out due to lack of space, but the full text is available from the Hnuti DUHA offices in Brno.

(389.3795) WISE Amsterdam

 

Dear Madam/Sir,

I am writing about the proposed US ExIm Bank loan to the Czech power utility (CEZ) to complete the Temelin nuclear power plant. There are a number of reasons why this loan is not in the interests of the Czech people or the US and specifically not the US ExIm bank.

The grounds for not approving this loan which might speak most loudly to the ExIm Bank are the potential for lender liability. The Czech Republic has signed neither the Vienna nor Paris Conventions, thus the normal western liability of the nuclear plant operator (CEZ in this case) is not in effect. In the event of an accident of any size, the Czech government or individual Czech people could sue those responsible for the construction of the plant, which could include the US ExIm Bank. Westinghouse recently claimed it would take no responsibility for the safety of the plant (they are building the safety systems). The current conservative cost estimates for the Chernobyl accident exceed US$300 billion, and are still rising.

There also exists no environmental impact statement (EIS) for the original plant design. We are under the impression that this is required by the US ExIm Bank, but even if it is not, it's absence would seriously hurt your legal position in the event of a law suit.

The Czech power utility claims Temelin construction is 90% finished for block 1 (hardware installation is 60% complete). This work has been done according to the original design of this plant, which is the Soviet VVER 1000/320 model. There are a number of design flaws with this Soviet model which will not be corrected by Westinghouse's proposed modifications to the core and safety systems.

Specifically, the small pressure vessel diameter has an insufficient water buffer for neutrons emitted by the fuel to protect the vessel wall. What this translates into is accelerated embrittlement and thus likely closure before full design life is complete. Also the plant layout for VVER 1000/320's is poor, leading to increased fire hazards. Additionally, the containment system of the VVER 1000/320 is also far from western standards.

The World Bank mission to the Czech Republic last year, headed by Dale Gray, has stated: "The mission suggests delaying any irreversible decision on the CEZ and SEP nuclear power program until the alternatives to be proposed by the G-7 next year (Tokyo 1993) are on hand." This advice is being ignored by the Czech government (which has announced, since this World Bank memorandum, it will go forward with Temelin, is continuing construction and has selected Westinghouse and is in the process of signing contracts).

At the same time the Czech government is taking World Bank money for the clean up of the profitable northern Bohemian coal power stations. These World Bank loans are further freeing assets to continue Temelin construction, in violation of the letter and spirit of the World Bank recommendations. Is the US ExIm bank interested in working with partners which ignore the recommendations of the development banks which are trying to help them?

The best investment in the energy sector in the Czech Republic is in energy efficiency technologies. The Czech Republic consumes twice the energy per unit output as the OECD countries. Energy conservation costs (per watt saved) are approximately one tenth the per watt costs of building new capacity. The World Bank estimates simple energy conservation measures can reduce Czech domestic electricity demand by 20 to 30%.

Additionally, there are numerous small scale, decentralized energy generating capacities available in the region. From cogeneration on the conventional side, to small scale hydroelectric on the renewables side [Before WWII, 400 MW of microhydro capacity existed, it was abandoned by the communists; the rivers are still flowing and new technologies could double this capacity to 800 MW - almost half the installed capacity of Temelin]. All of these substitute methods are safer, cheaper and faster to build than additional nuclear capacity, even when the costs already sunk into the plant are considered (and even if you ignore or severely underestimate decommissioning and waste management costs, as both the US and Czech governments do).

There is a high likelihood that the costs of this plant will exceed the current budget. The original Westinghouse estimate for their services at Temelin was US$ 250 million, now they are submitting contracts for over US$ 400 million, for minimally greater services. Westinghouse has a history of nuclear cost overruns both in the US and abroad. Plus the unique nature of this project (putting western control technology and core systems in Soviet shell - a task no one has ever attempted before), dramatically increases the chances that costs will exceed expectations.

Nor is Westinghouse necessarily the ideal partner for such a venture. Westinghouse is over US$ 6 billion in debt (having lost over US$ 1 billion per year for each of the last two years). It has recently fired its own president, has been sued by its own stockholders 11 times and by utilities for faulty steam generators (a key component of nuclear power plants, but not in the Temelin contract) 13 times.

Currently in the Czech Republic there is a growing anti-nuclear movement. In the region around the Temelin plant a clear majority of people oppose the construction of the plant [see box]. In the past month there have been several demonstrations in Prague (and more are planned). Even though the mis-information campaign of the government is changing some people's minds (especially in Prague), there is growing unrest and advanced plans for non-violent, civil disobedience at the plant, similar to the opposition which ultimately halted the nuclear industry in the west. This opposition (both local and international) will disrupt the construction of the plant (blockades are planned), challenge the legality of the construction in the courts (and hopefully acquire restraining orders) and draw national and international media attention to this controversial project (as opposition groups have with the World Bank funded Narmada dam in India). I find it unlikely that the US ExIm Bank does not have less controversial projects to invest its money in.

If, however, the economic, technical, environmental and political arguments are not enough, there is a bribing scandal connected with the Temelin plant. There are allegations that Prime Minister Klaus (or his political party) have received large bribes from Westinghouse. This would be consistent with the behavior of Nathael B. Woodson, who is directing the Westinghouse effort to secure the Temelin contract. In 1988, Woodson admitted he gave US$17 million to a political associate of Ferdinand Marcos to secure the Bataan contract for Westinghouse in the Phillipines. There is some other circumstantial evidence to support these claims. CEZ hired the consulting firm Colenco to evaluate the nuclear contractors who were being considered for completing Temelin (Westinghosue, ABB, CEGELEC and Siemens). Westinghouse's evaluation was tied for last place.

PM Klaus announced from the Westinghouse offices in the US that a letter of intent had been signed between Westinghouse and the Czech government. Interestingly, the Czech press, which was following PM Klaus' journey through the US, was barred from this press event.

Both PM Klaus and Westinghouse are denying all allegations of wrong doing, at this time.

In September of 1991, the US ExIm Bank made a "preliminary commitment" for a long term, minimum interest loan to CEZ of US $136 million. Hopefully, the facts (alone) above will help convince the US ExIm Bank that granting final approval on this loan would be financially imprudent and not in the best interest of this region. There are numerous other opportunities for the valuable financial services of your development bank in this region which is actively restructuring its economy.

Thank you for your time and congratulations on your new appointment,

 

Paxus Calta
SNEEEZ-Project
c/o Hnuti DUHA
Jakubské N.7
60200 Brno
Czech Republic
Tel: +42-5-22556 or 25337
Fax: +42-5-22428

 

ACTION ALERT:
Stop US Ex-Im Bank from helping to finish the Temelin nuclear power plant!

Dear friends,

The situation around the half constructed nuclear power plant at Temelin, in the Czech Republic, has changed recently. We are now asking you to help us to stop Temelin.

On 10 March 1993, the Czech government approved the termination of constructions at Temelin. The results of the poll were alarming: 18 votes in favor, 0 against. Since January, the government has been running a massive propaganda campaign for Temelin, frequently ignoring all democratic means of opposition such as open letters, petitions, or demands for open public discussions. The arrogance of Prime Minister Klaus in dealing with the opposition has disturbed also a lot of people assuming a neutral attitude towards Temelin. For instance, no Environmental Impact Assessment in order to evaluate the reactor's safety is to be done.

Under these circumstances we are going to help activate the local opposition, which is very strong: 54 of the surrounding 60 villages, representing some 80,000 inhabitants, are officially against Temelin. We are also planning a permanent protest camp in summer (you will be informed about this in time).

What could also stop - or at least delay - finishing Temelin is the lack of finances. The proposed Westinghouse contract for safety systems and new fuel design is to be financed by the US Ex-Im Bank. We think that writing letters to the bank's (new) director (asking him to quit the contract) may have some influence, especially under the new anti-nuclear US government.

Please remember that by helping us to stop the western nuclear industry in the East, you also help yourself - because no nuclear jobs in the East means the final end of the western (and eastern) nuclear industry.

Thanks a lot,

Jan Beranék

Please address your letters of protest directly to the director:

The President of the US Export-Import Bank
811 Vermont Ave., NW
Washington DC
USA

or fax them care of:

Greenpeace USA,
1436 U Street NW
Washington, DC 20009
USA
fax: +1-202-4624507; tel: +1-202-4621177