5 Chernobyl nuclear power plant
| (25839)
11544/04
COM(04) 481
+ ADD1
| Commission Report: Third Progress Report on the implementation of the Chernobyl Shelter Fund December 2003
Commission Staff Working Document: Third Progress Report on the implementation of the Chernobyl Shelter Fund — December 2003
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| Legal base | — |
| Document originated | 14 July 2004
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| Deposited in Parliament | 21 July 2004
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| Department | Trade and Industry
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| Basis of consideration | EM of 31 August 2004
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| Previous Committee Report | None
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| To be discussed in Council | Not applicable
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information requested
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Background
5.1 Following the accident of 26 April 1986, the shelter enclosing
the remains of the Chernobyl Nuclear Power Plant Unit 4 was constructed
rapidly and under extremely hazardous conditions. It was not intended
to be a permanent solution, is increasingly unstable and has deteriorated
such that rainwater gets in. There is a risk of collapse, which
would lead to further radioactive contamination of the surrounding
area.
5.2 In 1997 international experts finalised a multidisciplinary
construction management programme, designated the Shelter Implementation
Plan (SIP). The SIP envisaged remedial work directed towards making
the Shelter physically stable and environmentally safe. Under
European Bank for Reconstruction and Development (EBRD) management,
the Chernobyl Shelter Fund (CSF) was constituted to finance and
implement the SIP. The SIP project started effectively in 1998
with the setting up of the Project Management Unit. There are
five major goals:
- Reduce the potential for collapse
of the Shelter.
- Reduce the consequences of Shelter collapse,
should one occur.
- Improve the nuclear safety of the Shelter.
- Improve worker industrial safety and environmental
protection at the Shelter.
- Conversion to a safe environmental site.
5.3 The Commission presented a first progress report
in October 1999. A second report was presented in September
2001, which we cleared on 17 October 2001.[6]
The present report updates the information provided in the previous
ones, based mainly on the progress communicated by the EBRD at
the December 2003 CSF Contributors Assembly in London. There,
the EBRD reviewed the current situation of the CSF and presented
revised cost estimates for the New Safe Confinement (NSC), as
the final project is called. The USD 1059 million cost estimate
(USD 995 million plus USD 64 million for potential additional
work) is the first to be based on actual design work, and replaces
the original SIP estimate (approximately USD 768 million). This
is due to the inclusion of necessary works not foreseen in the
initial budget, the potential additional works and what the EBRD
regards as conservative escalation, risk and contingency assumptions,
rather than increases in baseline costs. A better cost estimate
will only become available once the market response for the largest
element — the NSC — has been received.
5.4 At CSF pledging conferences in New York (1997)
and Berlin (2000) the total sum pledged was USD 717 million (€754
million based on 2000 exchange rates). The Community contribution
was USD100 million followed by a second contribution of €100
million. However, as at 31 October 2003, the EBRD reports that
contribution agreements between contributors and itself amount
to some €615 million, and that payments received by the end
of November 2003 totalled some €480 million. So the EBRD
has indicated that contributors are likely to be called on again
in the near future to make new contributions for the completion
of the project. However, the EBRD says no new payments into the
fund would be required before 2005, and should be planned in principle
for 2006-7.
5.5 Additional challenges are set out in the Explanatory
Memorandum of 31 August from the Parliamentary Under-Secretary
of State for Small Business and Enterprise at the Department for
Trade and Industry (Mr Nigel Griffiths):
"The situation with the Ukrainian nuclear regulator
has improved during the reporting period. However regulatory approvals
remain one of major risks as they are on the critical path or
are closely linked to activities which have the potential to become
critical. It is essential that the regulator continues to be provided
with the required level of support to ensure that delays are avoided
and a proper regulatory and licensing process is fully implemented.
"A coordinated approach to the overall radioactive
waste problem at the site is being developed which requires a
strong involvement from the Ukrainian authorities. In particular
a solution for the high-level solid wastes needs to be worked
out. This implies additional costs and delays, and the EU TACIS
Nuclear Safety programme may have to assist in supporting these
additional costs.
"The schedule for the completion of the SIP,
which had been foreseen for 2007 is significantly delayed. The
completion of the project, with the commissioning of the NSC is
now foreseen by 3rd/4th quarter 2008."
The Government's view
5.6 The Minister goes on to say that:
"the Government welcomes the Commission's Third
Progress Report on the implementation of the Chernobyl Shelter
Fund [and] is fully committed to the international effort to carry
out remedial work on the Chernobyl Shelter directed towards making
it physically stable and environmentally safe.
"As the Report states the EBRD will require
further commitments from contributors prior to the signature of
the contract for the New Safe Confinement, which is currently
scheduled for the fourth quarter of 2004. These additional contributions
would probably need to be in place by 2006/7. The UK has already
contributed a further £10 million to the CSF from the G8
Global Partnership budget, in March 2004. The UK also contributed
a further £5 million to EBRD-managed Nuclear Safety Account,
specifically for work on radioactive waste clean up at the Chernobyl
site. This combined extra contribution of £15 million towards
the CSF and projects on the Chernobyl site financed by the CSF,
means that the UK will not be in a position to have to contribute
further to the CSF when the next pledging round takes place, as
noted in the Commission report."
Conclusion
5.7 Previous reports illustrated steady progress
in the early stages of a costly long-term programme. But this
third progress report has highlighted some major challenges at
what is clearly a crucial stage — significant cost increases,
funding uncertainties and suggestions of inadequate responses
on the part of the Ukrainian authorities. Nor is it clear what
the prospects are for their successful resolution. It may be
that "the UK will not be in a position to have to contribute
further to the [Chernobyl Shelter Fund] when the next pledging
round takes place". But others will not be free of such
obligations. But are they likely to fulfil them, especially if
the final estimates are, as intimated in the report, even higher,
once potential suppliers have actually quoted for the New Safe
Confinement? And what steps are being taken to ensure that the
authorities in the Ukraine play their part, without which, as
the Minister makes clear, successful completion of the project
— which on best estimates is four years away — will
be jeopardised? We are not as sanguine as the Minister appears
to be, and would be grateful if he would let us have his views
on these unresolved issues. Meanwhile, we will continue to hold
the document under scrutiny.
6 (22465) 9455/01; see HC 152-ii (2001-02), para 43
(17 October 2001). Back
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