You are here

EBRD approves K2R4 loan - Campaign continues

Nuclear Monitor Issue: 

(December 15, 2000) For five years the international community has been trying to prevent the European Bank for Reconstruction and Development (EBRD) from issuing a loan for completion of the nuclear units in Ukraine. It seemed that almost everyone was aware that the project does not make a sense for Ukraine including the Bank itself. However, the Board of Directors of the EBRD approved the loan on December 7, 2000. The Bank will make available a loan of US$215 million, albeit with a whole string of conditions attached.

(540.5226) CEE Bankwatch - It is disappointing to see the EBRD giving in to the blackmailing efforts of Ukraine, which threatened to delay the closure of the last remaining reactor at Chernobyl. This was the reason for some of the larger members voting in favor of the project despite the reservations they have made in the past about K2/R4.

However, it was clear that Chernobyl is going to be closed because of technical reasons. The only working Chernobyl reactor was licensed till December 15th, but has failed to work till then. It shut down for safety reasons just three weeks before its official closure. The Ukrainian authorities persisted in restarting the unit but it failed again. The State Department of Nuclear Regulation of Ukraine did not agree to issue permission for re-start of Chernobyl's 3rd reactor. One of Chernobyl's managers responded: "The start of the block should not be considered as a remedy or important for the country's energy industry, but there is no will to spoil the festive occasion and the international show organized by Ukrainian authorities for December 15 on the occasion of the final Chernobyl shut-down".

The EBRD project was supported only by 63,7 % of shareholding countries, 9 countries were against it and 11 abstained from voting. The EBRD weighs countries' votes based on the size of their contribution to the bank's capital.

In the EBRD votes have split up as following: In favor: 40 countries plus the European Commission and the European Investment Bank. Against: Austria, Bosnia, Cyprus, Israel, Malta, Netherlands, Norway, and Hungary. Abstained: Sweden, Ireland, Belgium, Germany, Italy, Denmark, Spain, New Zealand, Iceland, Poland, and Kazakhstan.

The governments of the countries like Germany, which abstained at the EBRD, must consider themselves as responsible for paying for new Chernobyls in Ukraine as those who supported the project. It was clear that only voting against the project could prevent loan from being approved by the EBRD board.

The EBRD has attached three pages of conditions associated with the loan. However, the EBRD Board has voted before the conditions have been met. That means those member states behind the EBRD decision have lost a chance to control the loan release. It will be up to the EBRD staff to decide when the conditions are met. Since the President of the Bank, representing the staff position, has recommended the loan to the board, we cannot trust their competence anymore.

"We cannot trust the EBRD anymore. Under the French president Lemierre the bank has become a representative of the nuclear lobby. Instead of playing a lead role in fostering sustainable development in the CEE region, as is so proudly stated in the Banks mission statement, it has now become involved in providing funding for the moribund nuclear industry. Today this institution became a bank for radiation development", said Yury Urbansky from National Ecological Center of Ukraine. "Ukrainians have already suffered from the accident in Chernobyl. Now the EBRD expects our people to be a source of funding for this inherently unsafe and uneconomic project."

The EBRD loan is based on conditions that additional funding is raised from other sources e.g. from the EU and a number of Export Credit Agencies. To date this additional funding has not been secured. Expected funding (in US$): EBRD 215 million, Euratom 585 million, Russian government 124 million, Ukrainian government 50 million, and Energoatom (the project sponsor) 159 million. The rest of the construction would be financed through Export Credit Agencies (UK 28 million, Czech Republic 16 million, France 136 million, Spain 23 million, Switzerland 14 million and USA 131 million).

On 13 December 2000, the European Commission (EC), acting on behalf of Euratom - The European Atomic Energy Community Treaty Agency - approved a loan of the Euro equivalent of US$585 million. This was made possible because in 1994, the EC voted to extend Euratom's mandate. Specifically, the commission authorized the agency to begin lending to projects in nine Central and East European countries.

Although most of the EU countries did not support the K2R4 project at the EBRD, the European Commission has taken a different position. The EC itself has been voting in favor of the project on the EBRD Board, and was one of the strongest proponents of the loan. How can it be logical that the EC has maintained a position that is supported by only 6 countries out of 15 in the EU?

The fight against K2R4 will go on. We shall take a closer look at Export Credit Agencies (ECAs) expected to provide guarantees for K2R4 investments. Ukraine has been on the blacklist as a country with a bad lending reputation. Again, it can only be for political reasons that ECAs can support such a project.

Finally, Ukrainian groups will keep a close look at the way K2R4 proceeds. The project has not passed the rules and procedures required by Ukrainian legislation. But we will keep counting on your support in our struggle.

Source and contact: Olexi Pasyuk, CEE Bankwatch Network PO Box #89, 01025, Kiev, Ukraine tel: +380 44 2386260 fax: +380 44 2386259