Nuclear Energy in Ukraine

Construction of Unit-3 and Unit-4 at Khmelnytska NPP has not yet started but the cost has already increased 2.5 times

Kyiv, 15 February 2011 – Energoatom and Atomstroyeksport signed a contract to supply reactor equipment for power Unit-3 and Unit-4 at Khmelnytska nuclear power plant. However, the cost for completion of Khmelnytska NPP grows with each new report.

On 09 February, Energoatom and Russian Atomstroyeksport signed a contract concerning the development of technical design for reactor facility and supply of reactor facility equipment for Unit-3 and Unit-4 at Khmelnytska NPP. The companies also agreed on a schedule of signing contracts for the supply of equipment of prolonged manufacturing cycle and for the development of engineering documentation.

The National Ecological Centre of Ukraine considers it unacceptable that the state-owned company signs any contractual arrangements for construction of Unit 3 and 4 at Khmelnytska NPP without a final feasibility study for the project investment and clear understanding of the sources for its funding.

“Business activity of NNEGC Energoatom in the field relating to completion of Khmelnytska NPP is puzzling, because currently there is no clear understanding of the full cost of Khmelnytska NPP completion. The sources of servicing the loan to be granted by Sberbank of Russia which Energoatom expects to raise are also unknown. Furthermore, the estimated cost of Khmelnytska NPP completion is growing with every new official report” – comments energy program coordinator for the National Ecological Centre of Ukraine, Arthur Denysenko.

Thus, in April 2010 according to estimates of Energoatom chief executives, the completion cost of Units 3 and 4 was UAH15 billion. At the end of the year, this figure rose up to UAH30 billion. After signing the contract with Atomstroyeksport, President of Energoatom Yuri Nedashkivsky could not tell the cost of operations, but the company’s estimation of the completion work is already EUR4 billion (UAH40 billion). So, the construction cost of Khmelnytska NPP increased 2.5 times for less than half a year, while the actual construction has not even started out.

However, as international experience confirms, the cost of nuclear construction could rise even more than 2.5 times. The situation with Belene (Bulgaria) is similar to Ukrainian. Construction of two Soviet-design units started in 1987, and in 1990, the works were halted following the protests by local people and the uncertainty with the financial matters of the project. In 2005, the agreement was achieved that Atomstroyeksport would finish the construction. The cost of completing two units was expected to be approximately EUR 2.5 billion. In 2010, the construction of Belene was estimated as EUR 6.4 billion, but according to Bulgaria government, given the cost of loan and the work of consultants, the actual price of Belene will reach about EUR 9 billion. It should also be noted that the time delays and budget increases of nuclear construction is a common trend associated with all nuclear construction sites around the world.

Instead of implementing the questionable in technical and financial terms nuclear project it would be more effective to invest into modernization and technical re-equipment of thermal power plants, which will improve the environmental situation in the TPP areas, enhance their efficiency and improve the stability of Ukrainian integrated power grid operation. In addition, it will help to meet the international obligations undertaken by Ukraine to the European Energy Community, which Ukraine joined last year.