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Ukraine: EU Approves Reduced Loan To Upgrade Nuclear Units

The European Commission today approved an $83 million loan to upgrade two new "third-generation" nuclear reactors in Ukraine. The decision should put a formal end to a protracted disagreement with Ukrainian authorities over conditions attached to the loan. The European Commission today emphasized that the figure is significantly less than the EU's initial offer in 2000.

Brussels, 20 July 2004 (RFE/RL) -- The European Commission today approved an $83 million loan to finance the safety upgrade of the so-called K2R4 project, under which two new "third-generation" nuclear units have been commissioned for plants at Khmelnitskiy and Rovno.

The reactors are expected to start up later this year.

Today's loan is significantly lower than the initial amount -- $585 million -- which the EU offered in 2000.

European Commission spokesman Gilles Gantelet told RFE/RL that the delay was caused by conditions sought by Ukraine, as well as the EU's own safety concerns.

"This agreement is based mainly on two important new aspects," Gantelet said. "The first one is that the contribution of Ukraine is more important, and the second one is that the total amount is a lot less expensive -- which means that [the] prime [concern] for Ukraine was wanting to make sure that [they retain] their independence in the choices which are made, while the [main concern for] Europe was that we wanted to be sure that we were using the money for the right thing, which is to upgrade safety issues."

The European Commission says the EU loan will only finance safety upgrades for the two new reactors.

The same restrictions apply to an additional $42 million loan approved recently by the European Bank for Reconstruction and Development (EBRD).

Initially, in 2000, the EBRD had offered $215 million for the K2R4 project.

The commission says in a statement that Ukraine's wish to pay for a greater share of the project has become feasible thanks to improvements in the cash collection of electricity bills. Another factor is said to be the decision to base charges on the actual expenditure incurred by Energoatom, Ukraine's nuclear-energy provider.

An EU official told RFE/RL on the condition of anonymity that, as in 2000, the granting of the loan has been severely criticized by environmental organizations. Groups such as Greenpeace say the planned upgrades to safety features remain inadequate.

The official said, however, that having recognized that Ukraine is not going to give up nuclear energy, the EU has simply exercised "political responsibility" and tried to improve matters.
Groups such as Greenpeace say the planned upgrades to safety features remain inadequate.

Funding from the bloc goes to upgrade security, and further safety-related commitments have been extracted from Ukraine.

The official said nuclear safety is an increasingly important element in EU relations with its neighbors.

He noted that nuclear concerns had played an important part in recent EU-Russia talks on the extension of the mutual partnership agreement to the new EU member states.

In exchange for trade concession, the EU secured a Russian commitment to "coordinate and cooperate" with the bloc on nuclear issues.