K2R4: the never-ending story

It is difficult for Ukraine’s President Kuchma to forget about a project which he has argued in favour of for so long. There have been too many promises. Mindful of G7 promises to Ukraine, it is difficult for EBRD to now say no to the project. It 1998 it was said for the first time that project financing is secured. And now?

Reactors should be completed at all costs, it is the state priority. It hardly matters why anymore - the story is too long - but one thing is clear: President Kuchma worries about it. During a recent meeting at the Rivne power plant he started with a complaint: “I read a report on K2R4 completion last night at about 11. Then I could not sleep, I tossed and turned.” It was once said that we have these reactors as they are ‘almost completed’. However, it was surprising that this ‘almost’ was estimated to be costing USD 1,48 billion. According to Energoatom they have never stopped construction at the reactors throughout the last ten years and it is still ‘almost completed’. During the same period, fossil power plants were falling apart just staying in reserve as there were no consumers able to buy electricity.

Nuclear threat blackmail – that has always been the strategy of the Ukrainian nuclear industry. At the international level, while Ukrainian delegations were connecting Chernobyl closure with money for new reactors, in Ukraine the nuclear industry has demanded money for itself by frightening the government and public with allegations about the ‘hungry operators of the reactors’ who are naturally more dangerous than the hungry teacher, doctor or even the operators of coal-fired power plants.

As a result Energoatom, operating at about one quarter of installed capacity, produces half of the country’s electricity, proudly announcing this fact on billboards around the city. How have they achieved it since they were practically bankrupt some five years ago? It was easy, as Energoatom has received far more state support than electricity producers. Look at the Chernobyl power plant. It was part of Energoatom when it was still bringing in money, and now the company has no decommissioning burden as the plant is no longer their property.

Furthermore, according to a Ukrainian government decree, since 2003 the electricity price of all producers will be taxed (they call it a special purpose surcharge) to accumulate money at the budgetary fund dedicated to the completion of K2R4 along with a couple of similarly useless projects. Thus in effect all electricity prices for industry consumers have been raised in order to complete the reactors. And perhaps to let Kuchma sleep well.

In 2004 Energoatom expects UAH 600 million to come from a special budget fund contributing to the publicised needof UAH 1,2 billion (USD 225 million). The difference is expected to come from the selling of bonds specially issued for completion of the reactors. By the end of March UAH 230 million had been raised via the bonds sale. It is clear that the government will find a way to persuade buyers (commercial banks primarily) to buy more of the bonds.

The project seems to have a bright future. The public pays and no foreign funding is needed. Kuchma recently commented, “They (the EBRD and EC) promise to give us money in the summer or autumn. They can keep it. We will be able to complete it ourselves. I do not have any doubts.” To ensure that there is a scapegoat, the president has made personalities responsible: “I would like to urge Mr Klyuev (vice Prime Minister) that if the units are not started on time, a decision on his dismissal will be taken. There is no place for fooling around with issues of state interest.”

However, the Ukrainian government is still intent on receiving funding for the reactors from the EBRD and Euratom – and now it’s for modernisation of the reactors. The idea is to upgrade the units to increase their safety after completion. There is a noticeable lack of information on this available from the EBRD itself, so a lot of questions are raised. It is not clear how far the negotiations have progressed, what the project aim is, nor what kind of modernisation can be expected once the units are connected to the grid?

In a letter recently prepared by a number of NGOs there was strong opposition to the current EBRD plan for financing this project. NGOs have questioned the approach being proposed - and sanctioned by EBRD involvement - by the Ukrainian authorities. The attempt to increase the safety of reactors after their completion makes a mockery of previous statements by the Bank on the importance of nuclear safety. If EBRD nuclear experts believe that safety improvements are needed, then these should be undertaken prior to a reactor being operational. To propose to undertake these measures after the reactor is operational makes a nonsense of international safety procedures.

The completion of the K2/R4 reactors will decrease the overall level of nuclear safety in Europe. Even taking into account the proposed post-completion safety upgrade, these Soviet-designed reactors would not receive a construction license in Western Europe. Experience with the completion of the Czech nuclear power plant at Temelin provides clear evidence that VVER 1000 reactors cannot be upgraded to a satisfactory safety level. Moreover, safety procedures in Ukraine are lower than in other European countries and the modernisation programme is not being implemented according to plan due to a lack of funding.

The Khmelnitsky and Rivne nuclear units are scheduled to be operational on August 14 and September 16 respectively. Neither President Kuchma nor the gov-ernment have provided a rationale for these dates, but the Ukrainian political calendar does. The country is facing presidential elections in October and state bureaucrats, with links to the So-viet era, need gigantic achievements to present to the public. It does not matter how controversial and senseless such achievements are – the puppet media are adept at shaping public opinion.