8 Chernobyl Nuclear Power Plant
| (a)
(25839)
11544/04
+ ADD 1
COM(04) 481
(b)
(29323)
5116/08
+ ADD 1
COM(07) 825
|
Third Progress Report on the implementation of the Chernobyl Shelter Fund December 2003 and Commission Staff Working Document
Fourth Progress Report on the implementation of the Chernobyl Shelter Fund September 2007 and Working Document
|
| Legal Base | —
|
| Department | Energy and Climate Change
|
| Basis of consideration | Minister's letters of 31 December 2010 and 11 February 2011
|
| Previous Committee Report | HC 16-x (2007-08), chapter 7 (30 January 2008)
|
| To be discussed in Council | To be determined
|
| Committee's assessment | Politically important
|
| Committee's decision | (a) Cleared
(b) Cleared (decision reported on 30 January 2008), further information now received
|
Background
8.1 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, and in 1997 the G7 Denver Summit established
the Chernobyl Shelter Fund (CSF: managed by the European Bank
for Reconstruction and Development, funded by 28 national donors
and the European Commission), which in turn, and with the involvement
of international experts, led to a multidisciplinary construction
management programme, designated the Shelter Implementation Plan
(SIP), and to be financed by the CSF.
8.2 The SIP envisaged remedial work directed
towards making the Shelter physically stable and environmentally
safe. There were five major goals:
- reduce the potential for collapse
of the Shelter;
- reduce the consequences of the Shelter's collapse,
should one occur;
- improve the nuclear safety of the Shelter;
- improve the safety of workers and environmental
protection at the Shelter; and
- make the site environmentally safe.
The Third Progress Report
8.3 Council Decisions 98/381/EC and 2006/908/EC
concerning the Community's contributions to the EBRD for the CSF
requires the Commission to submit progress reports on its implementation
to the European Parliament and the Council.
Such reports were thus
submitted in October 1999, September 2001
and December 2003.
8.4 When the previous Committee considered the
Third Progress Report on 11 October 2006, it noted that, while
the first two Reports had illustrated steady progress in the early
stages of a costly long-term programme, that third Report (which
its predecessors had first considered in September 2004) highlighted
some major challenges at what was clearly a crucial stage —
significant cost increases, funding uncertainties and suggestions
of inadequate responses on the part of the Ukrainian authorities.
They therefore asked the then Minister to provide his views on
these unresolved issues, and continued to hold the document under
scrutiny.[33]
8.5 It was against this background that, at that
meeting, the previous Committee also considered a Council Decision
to pay the first instalment of the €49.1 million (then £33.6
million) Third Community Contribution to the CSF, amounting to
€14.4 (then £9.8) million. In his accompanying Explanatory
Memorandum, the then Parliamentary Under-Secretary of State at
the Department for International Development (Mr Gareth Thomas)
explained that the Community pledge formed part of a further €173
(then £118.6) million that major donors had so far pledged
and was intended to be paid over 2006-2009; that it would be committed
and paid from the dedicated CSF line in the 2006 EU budget; that
the balance €34.7 (then £23.8) million would be paid
over 2007-2009 and would be subject to a new Council Decision;
and that the UK share of the Community contributions was 17.5%.
8.6 He also noted that the Government was an
important donor to the CSF and strongly supported this proposal
for Community funding; described the work funded by the CSF as
essential, new and extremely challenging; said that implementation
of the range of tasks to be executed over a period of approximately
10 years under the SIP "will require tight management to
prevent further cost and time over-runs"; and, describing
the EBRD as "a strongly performing organisation that works
to high environmental standards", said that he was "confident
that it is well placed to manage funding for this complex issue".
8.7 For their part, our predecessors found it
disturbing that, 18 months after the previous Minister's earlier
letter, the picture remained very much as it was then, with continuing
uncertainties about costs, funding and the contribution of the
Ukrainian authorities. They nonetheless accepted the importance
of upholding the Community's commitments towards a self-evidently
important project, and accordingly cleared the decision.
8.8 But they also asked the Minister to let the
Committee know, before the end of 2006, the outcome of the three
"separate but linked problems" that he had outlined,
and the consequences for costs and funding, both generally and
for the UK, and for his assessment then of the contribution of
the Ukrainian authorities; and in the meantime retained the Third
Progress Report under scrutiny.[34]
8.9 Although it now seemed that a further letter
to them had been signed on 3 January 2007 by the then Parliamentary
Under-Secretary of State at the then Department for Trade and
Industry (Lord Truscott), it was never received by the previous
Committee. In the meantime, they received the Fourth Progress
Report.
The Fourth Progress Report
8.10 The then Minister (Malcolm Wicks) welcomed
the Report and professed continuing commitment "to the international
effort to carry out remedial work on the Chernobyl Shelter directed
towards making it physically stable and environmentally safe."
He said that the then Government had been actively involved in
negotiations with the EBRD and other donors on the implementation
of the SIP and shared the Commission's concerns on the delays
and cost overruns experienced. He welcomed the progress made in
2007 towards resolution of the contractual, political and financial
problems that had caused turbulence in the programme. As the report
stated, following successful conclusion of the key contract negotiations,
there was now widespread agreement amongst donors, the EBRD and
Ukraine that additional funding would be required. As of end-June
2007, the CSF has recorded total contributions of €739 (then
£541.9) million from international donors. To date the UK
had contributed €47 (then £34) million to the SIF; other
major donors' contributions thus far had been (then €/£
equivalent) — Germany €60 (£44) million, France
€41 (£30) million, Japan €41 (£30) million,
EU €204 (£149) million, US €138 (£101.2) million,
Canada €34 (£24.9) million, Russia €9 (£6.6)
million. Negotiations were currently underway amongst major donors
on burden sharing arrangements and the then Government had indicated
that it was prepared to make an additional financial contribution
as part of an established fair burden sharing arrangement. The
current estimate was that an additional €130 million (£95.3million)
would be required from donors to complete construction of the
shelter, although it had to be stressed that this was an estimate
which would only be better refined as the detailed design process
proceeded
8.11 He concluded by saying that, given the ongoing
UK financial commitment and the difficulties the fund had experienced,
the then Government intended "to continue to monitor progress
on implementation very closely."
The previous Committee's assessment
8.12 In clearing the Third and Fourth Progress
Report, the previous Committee noted that, whether the "sound
management, political commitment and stability in Ukraine"
deemed essential by the then Minister was forthcoming or not,
in the meantime at least another €130 million would be required
from, inter alia, the EU and the UK. However, given the
passage of time and the unsatisfactory nature of the Department's
follow-up to its requests, the previous Committee found itself
unclear as to what the total estimated cost now was — the
€850 million cited by the then Minister in July 2006, plus
this further €130 million, or a larger figure; and whether
this included the €50-70 million by which the bids from prospective
contractors exceeded estimates at that time.
8.13 The previous Committee also noted that a
further Council Decision was now due regarding the present Third
Community Contribution. They said that they were content to wait
until it is submitted for scrutiny, but at that time would be
grateful if the Minister would concisely and clearly summarise:
— what
the estimated cost of the New Safe Confinement then was;
— what the actual and committed level of
funding was to the CSF;
— what the actual and prospective UK contributions
were;
— what the actual and prospective Community
contributions were;
— how much each of the other donors had
provided and was committed to provide.
8.14 In the meantime, they cleared both the Third
and Fourth Progress Reports, the latter with the proviso that
the above information was provided when the relevant Council Decision
was submitted for scrutiny.[35]
The Minister's letter of 31 December 2010
8.15 The Minister of State at the Department
of Energy and Climate Change (Charles Hendry) begins his letter
by saying that he very much regrets that it has not been possible
to provide adequate answers to the previous Committee's request
until now. This, he says, is due to the failure of the major contractor
for work funded by the CSF, the Novarka consortium, to provide
a cost estimate for the CSF-funded New Safe Confinement (NSC)
project. Strong representation by his officials and the representatives
of other major donors to both the EBRD and Novarka have, however,
resulted in donors being provided with an assessed cost estimate
in October 2010, which he says now enables him to answer all of
the previous Committee's requests, as follows:
—"WHAT THE ESTIMATED COST OF THE NEW SAFE
CONFINEMENT …IS;
"The main contractor for the New Safe Confinement
(NSC) work, the Novarka consortium, estimates that the cost of
the NSC will be €990.7 million. Taking into account the estimated
costs of other works under the Chernobyl Shelter Implementation
Plan (SIP), funded through the EBRD-managed Chernobyl Shelter
Fund (CSF), plus allowances for risk and escalations, the overall
cost to implement the SIP is €1.594 billion.
—"WHAT THE ACTUAL AND COMMITTED LEVEL
OF FUNDING IS TO THE CSF;
"To date the Fund has received €793 million
and an amount €23 million is still outstanding against existing
Contribution Agreements. A few donors have made pledges for further
contributions to the CSF without entering into contribution agreements.
These pledges amount to €3.5 million. The EBRD has entered
into a Grant Agreement with Chernobyl Nuclear Power Plant (ChNPP)
which provides € 58 million to the NSC project. While this
grant is not part of the CSF the amount can be taken into account
to provide an overview of available and required funds. The EBRD
has also decided that any interest income generated by this grant
amount will be used for the New Safe Confinement. The Fund has
to date generated an interest income of €102 million and
the EBRD grant €350,000. Taking these sources of income together
and without any further contributions the CSF can provide a maximum
overall funding of €990 million. In order to complete the
SIP program a further €604 million will therefore be required.
—"WHAT THE ACTUAL AND PROSPECTIVE UK CONTRIBUTIONS
ARE;
"UK contributions to the CSF to date total US$16,820,000
and £25,930,000, equating to a total of €55,446,512
received in the CSF. Discussions between G8 members and other
international donors on future contributions to the CSF are ongoing
and it is not possible at this moment to judge what future UK
contributions may be. These figures include a UK contribution
to the CSF of £3,800,000 (€4,800,000) made in April
2008, subsequent to the 2007 international CSF pledging round,
and it is our expectation that 2008 contribution will be counted
as an advance contribution in any future pledging round. The Government
of Ukraine has stated that it wishes to host events, including
a pledging conference, connected with the 25th Anniversary
of the Chernobyl Accident in April 2011.
—"WHAT THE ACTUAL AND PROSPECTIVE COMMUNITY
CONTRIBUTIONS ARE; AND
—"HOW MUCH EACH OF THE OTHER DONORS HAS
PROVIDED AND IS COMMITTED TO PROVIDE
"Attached to my letter is a table,[36]
provided by the EBRD, showing contributions to the CSF as at 30
September 2010. This includes Community contributions to date.
Since discussions between potential donors on future contributions
to the CSF are ongoing, it is not possible at this moment to judge
what future Community contributions may be."
The Minister's letter of 11 February 2011
8.16 The Minister writes further to his letter
of 31 December 2010 to provide information that he says the Committee
may find useful in order to understand why no further Council
Decisions concerning the third contribution EBRD for the CSF have
been submitted for scrutiny, as follows:
"While the first instalment of the third Community
contribution to the EBRD for the CSF was made following a Council
Decision in December 2006, all subsequent instalments, totalling
an additional €34.7 million under the third Community contribution
plus an additional €10.7 million in advance of future CSF
pledging rounds, have been made using Community funds allocated
to the Instrument for Nuclear Safety Cooperation (INSC). The INSC
was established through the Council of the European Union's Council
Regulation (Euratom) No 300/2007 of 19 February 2007.
"The general objective of the INSC is to finance
measures to support the promotion of a high level of nuclear safety,
radiation protection and the application of efficient and effective
safeguards of nuclear material in third countries. The financial
reference amount for implementation of the INSC over the period
2007 to 2013 is €524 million.
"Under the rules laid down in Council Regulation
(Euratom) No 300/2007, the European Commission, which implements
the INSC, submits multi-annual strategy papers, indicative programmes
and annual action programmes for INSC activities, including contributions
to the CSF, to an INSC Committee composed of representatives of
the Member States, and chaired by a representative of the Commission,
for approval. Officials from my Department represent the United
Kingdom on the INSC Committee. This approval process does not
require a Council Decision for each instalment of the contributions
to the CSF, although the Commission is required to report annually
to the Council and the European Parliament on the implementation
of assistance through the INSC. For this reason there have been
no Council Decisions on Community contributions to the CSF for
the Committee to scrutinise subsequent to the first instalment
of the third Community contribution in December 2006."
Conclusion
8.17 It seems extraordinary that it has taken
three years to provide the information requested and that, even
now, it is not possible for the Minister to judge what future
EU contributions may be. But that is for others, rather than us,
to pursue, should they so wish.
8.18 We presume that, being inter-institutional,
the progress report on implementation to which the Minister refers
will be deposited for scrutiny.
8.19 In the meantime, we report this further
information to the House in order to complete the scrutiny process
thus far.
Annex 1 — 8 October
2010
Contributions to the Chernobyl Shelter
Fund as at 30 September 2010
| Contributors |
_
Currency
| Contributions
in currency
| Contributions EUR equivalent
(as per CSF
Rules) *
| Effective EUR
contributions
(actually
received) **
|
| Austria | EUR
| 7,500,000
| 7,500,000
| 7,500,000
|
| Belgium | BEF
| 24,000,000
| | |
| Belgium | EUR
| 3,694,000
| 4,288,944
| 3,691,941
|
| Canada | USD
| 32,200,000
| | |
| Canada (Note 1) | USD
| 800,000 |
| |
| Canada | CAD
| 8,000,000
| 34,925,491
| 36,468,891
|
| Denmark | EUR
| 2,500,000
| | |
| Denmark | DKK
| 18,500,000
| 4,967,917
| 4,988,643
|
| EC | EUR
| 250,206,000
| 250,206,000
| 250,206,000
|
| Finland | EUR
| 4,880,000
| 4,880,000
| 4,880,000
|
| France | EUR
| 52,470,000
| 52,470,000
| 51,804,018
|
| Germany | USD
| 23,610,000
| | |
| Germany | EUR
| 39,225,000
| 60,485,693
| 48,943,174
|
| Greece | EUR
| 5,000,000
| 5,000,000
| 3,537,562
|
| Ireland | EUR
| 8,020,925
| 8,020,925
| 8,020,925
|
| Italy | USD
| 16,820,000
| | |
| Italy | EUR
| 26,320,002
| 41,466,332
| 41,646,729
|
| Japan | USD
| 50,799,483
| 45,744,694
| 46,454,527
|
| Kuwait | USD
| 6,000,000
| 5,402,972
| 5,414,835
|
| Luxembourg | EUR
| 2,500,000
| 2,500,000
| 2,500,000
|
| Netherlands | NLG
| 6,000,000
| | |
| Netherlands | EUR
| 3,000,000
| 5,707,337
| 5,688,172
|
| Norway | USD
| 5,000,000
| | |
| Norway | NOK
| 20,000,000
| 6,976,254
| 7,109,359
|
| Poland | EUR
| 1,598,290
| | |
| Poland | USD
| 1,001,350
| 2,500,001
| 2,445,456
|
| Russian Federation |
USD | 17,000,000
| 15,308,420
| 8,087,075
|
| Spain | USD
| 3,031,433
| | |
| Spain | EUR
| 2,350,000
| 5,079,791
| 5,362,635
|
| Sweden | EUR
| 2,500,000
| | |
| Sweden | SEK
| 40,000,000
| 7,154,681
| 6,742,451
|
| Switzerland | EUR
| 5,000,000
| | |
| Switzerland | CHF
| 7,000,000
| 9,305,043
| 9,543,996
|
| Ukraine (Note 2) | USD
| 50,000,000
| 45,024,764
| 10,136,098
|
| UK | USD
| 16,820,000
| | |
| UK | GBP
| 25,930,000
| 53,122,312
| 55,446,512
|
| USA | USD
| 191,200,000
| | |
| USA (Note 3) | USD
| 11,800,000
| 182,800,540
| 163,066,538
|
| Total : |
| | 860,838,112
| 789,685,537
|
| | |
| |
| Donors (Note 4) |
| | | |
| Iceland | USD
| 10,000 |
| 9,107 |
| Israel | USD
| 250,000 |
| 280,710 |
| Korea | USD
| 400,000 |
| 381,143 |
| Portugal | USD
| 200,000 |
| 169,205 |
| Slovak Rep. | EUR
| 2,000,000 |
| 2,000,000 |
| Slovenia | USD
| 300,000 |
| 320,555 |
| Total: |
| | | 3,160,720
|
| Grand Total: |
| | | 792,846,257
|
Notes:
- Canada's contribution includes USD 0.8 million
(Euro 720,396) of bilateral assistance for the SIP.
- Consists of cash contribution and in-kind contribution.
Yearly appropriations to be confirmed following reconciliation.
In addition, at the May 2005 pledging event, Ukraine declared
it will assume responsibility for the SIP task "deconstruction
of unstable parts" which is valued at USD 22 million.
- USA's contribution includes bilateral assistance
for the SIP in the amount of USD 1t8 million (Euro 10,625,844).
- According to CSF Rules Section 2.06. Donations
made in currencies other than EUR will be recorded in EUR at the
relevant rate of exchange at the date of receipt.
Notes:
* Historic rates as per CSF Fules: BEF: 40.3399 /
CAD: 1.5358 / DKK: 7.4962 / NLG: 2.2162 / NOK: 8.0848 / SEK: 8.5935
/ CHF: 1.6260 / GBP: 0.6828 / USD: 1.1105
** Actual received, and if applicable, exchanged
at date of receipt — excluding in-kind contributions.
33 See HC 42-xxx (2003-04), chapter 5 (9 September
2004). Back
34
See (27610) 10669/06 and (25839) 11544/04: HC 34-xxxvii (2005-6),
chapter 12 (11 October 2006). Back
35
See headnote: HC 16-x (2007-08), chapter 7 (30 January 2008). Back
36
Reproduced at Annex 1 to this chapter of our Report. Back
|
