PURPOSE: presentation of the Fourth Progress Report on the Implementation of the Chernobyl Shelter Fund (CSF).

CONTENT: the Chernobyl Nuclear Power Plant exploded on 26 April 1986. Some 200,000 people were evacuated from the vicinity of Chernobyl and a Shelter (referred to as sarcophagus) enclosing the remains of ChNPP Unit 4 was constructed under exceedingly hazardous conditions. However, the shelter was not intended to be a permanent solution. In May 1997, a group of international experts finalized a multidisciplinary construction management programme designated as the Shelter Implementation Plan (SIP), which foresaw remedial work on the Shelter to make it physically stable and environmentally safe. In the same year, the G7 and the Commission and other donors requested the European Bank for Reconstruction and Development (EBRD) to set up the Chernobyl Shelter Fund (CSF) to finance the SIP.

In 2007, ten years after the agreement on the SIP between the G7, the EC and Ukraine, most of its tasks have been completed, enabling the start of the construction of the New Safe Confinement (NSC) which represents the last major construction project at the site.

The initial indicative cost of the SIP amounted to approximately USD 758 million for the period 1998-2005. A first pledging conference was held in New York (1997) to raise the required funds, where a total of USD 400 million was pledged by 25 countries. Council Decision 98/381/EC provided the legal basis for a Community contribution to the CSF of a USD 100 million pledge.

A second pledging conference was held in Berlin, where some USD 320 million were pledged, bringing the total amount close to the estimated cost of USD 768 million. The Community pledged a second contribution of €100 million which was approved by Council decision 2001/824/EC (see CNS/2001/0113 ).

In 2003, the Project Management Unit (PMU) presented a revised schedule and a first cost estimate, based on the actual cost of completed projects, amounting to some USD 1,091 million. However, due to delays, escalation and increases in the prices of labour and materials, a further significant increase relative to the first cost estimate was subsequently announced to the Assembly of Contributors, bringing the total cost of the SIP to USD 1,390 million.

In accordance with Art. 3 of Council Decision 98/381/EC and Art 4 of Council Decision 2006/908/EC concerning the Community’s contributions to the EBRD for the CSF ( CNS/2006/0102 ), the Commission now presents a fourth report on the use of the funds pledged to the SIP. Such reports were submitted in October 1999 (COM(1999)0470), September 2001 (COM(2001)0251) and December 2003 (COM(2004)0481). The present report updates the previous ones, based mainly on the progress communicated to the Assembly of Contributors and other information provided by the EBRD.

Schedule for implementation: the next steps planned for implementation of the SIP are:

December 2008: completion of detailed design for NSC (an arch-shaped structure which will be assembled in a safe area near Unit 4 and then slid across the old shelter ): 16 months December 2011: completion of NSC: construction 3 years

Cost estimate: as the delays in the tendering process impacted the conclusion of the contract for the NSC, the total cost of the SIP will approach USD 1,390 million (an increase of USD 186 million relative to its previous estimate).

The next important step in the assessment of the cost will be the completion of the detailed design of the NSC, which will provide precision on the quantities and cost of materials actually needed. This is expected to be available by the end of 2008.

Available resources and expenditure: at the end of June 2007 the BERD recorded total contributions of €739 million to the CSF. In addition, there are a number of pledges (mostly made at the May 2005 London fund-raising event) amounting to some €100 million, which are yet to be committed as Contribution Agreements and actual payments.

Until 30 June 2007 €457 million had been allocated under the grant agreements concluded until then. The total value of the contracts concluded under these grant agreements amount to €356 million, of which €308 million have been disbursed. The amount of unallocated funds as of 30 June 2007 was some €300 million.

New pledges: following agreement amongst the donors on the respective contributions, a pledging event took place at the EBRD in London in 2005. The donors pledged the equivalent of €181.496 million, including €49.1 million from the Commission, €22 million from Ukraine and €10 million from Russia. The first instalment of the Commission’s pledge was paid in 2006, and a second in 2007. The remainder of the will be paid over the period 2008-2011.

Conclusion: the SIP management and environmental audits carried out in 2007 confirmed the adequacy of existing management, as well as industrial and health and safety arrangements. However, the management audit pointed again to the need to increase the number of qualified Ukrainian staff in the Project Management Unit (PMU), to replace dependency on Western PMU staff and ensure long term stability of management after commissioning of the NSC.

The schedule for completion of the SIP is currently end 2011. Good management and cooperation of all parties, in particular of the Ukrainian government and the regulators, will be essential for the successful completion of the project.

According to the latest estimates, the existing funds are not sufficient to complete the project. Additional funds will be required to complete the Chernobyl projects financed by the CFS as well as the Nuclear Safety Account. The SIP will, therefore, have to continue relying on the solidarity of the international community, with the determined help of Ukraine.

COM(2007)0825
EUR-Lex

SEC(2007)1701
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PURPOSE: presentation of the third progress report on the implementation of the Chernobyl Shelter Fund.

CONTENT: Following the accident at Chernobyl (26 April 1986), the Shelter enclosing the remains of Chernobyl Nuclear Power Plant (ChNPP) Unit 4 was constructed under exceedingly hazardous conditions. It was not intended to be a permanent solution and, in fact, it is increasingly unstable, it has deteriorated and allows the ingress of rainwater.

In May 1997 a group of international experts from the EU, USA and Japan finalized a multidisciplinary construction management program designated as the Shelter Implementation Plan (SIP) directed towards making it physically stable and environmentally safe. Under the management of the European Bank for Reconstruction and Development (EBRD), the Chernobyl Shelter Fund (CSF) was constituted to finance and implement the SIP. The initial cost estimate of the project (made in 1997) amounted to approximately USD 758 million (1998-2005).

A first pledging conference was held in New York in November 1997 raised some USD 400 million. The Council Decision 98/381/EC of 5 June 1998 concerning the Community contribution to the European Bank for Reconstruction and Development for the Chernobyl Shelter Fund represented the legal basis for a Community contribution to the CSF of a USD 100 million.

A second pledging conference was held in July 2000 in Berlin. Some USD 320 million were pledged carrying the total amount pledged in the two conferences close to the estimated cost of 768 million USD. The Community pledged a second contribution of 100 million euro which was approved by the Council decision 2001/824/EC (see CNS/2001/0113 ).

According to Art. 3(2) of the Council Decision 98/381/EC, the Commission now presents its third report on the use of the funds pledged. A first progress report on the implementation of the CSF was published in October 1999 (COM(1999)0470) and a second in September 2001 (COM(2001)0251. The present report updates the information provided in the previous ones based mainly on the progress communicated to the Assembly of Contributors by the EBRD.

New Safe Confinement Schedule: d uring the CSF assembly in Slavutych in July 2003, the PMU presented the revised schedule for the completion of the NSC. The major milestones are summarized as follows:

Schedule starts with delivery of Conceptual Design Report and Sanitary Compliance Report (December 2003). Design activities

- Detailed design - 1 year

- Regulatory approval – 1 year in 2 phases

Construction Activities:3 years NSC commissioning: third and fourth quarters 2008.

The completion of the project with the commissioning of the NSC by the 3 rd quarter of 2008 does not include provision for contingency. The major risks of delays concern the approval and decision process and the availability of resources to execute the project.

Financial Overview: d uring the Assembly of Contributors in London on 2 December 2003, The EBRD made a presentation of the revised cost estimates and current situation of the CSF. The cost estimate of USD 1 059 million was the first one based on actual design work, which will replace the original SIP estimate.

The total sum pledged to the CSF at the conferences of New York in 1997 and Berlin in 2000 amounted to some USD 717 million (€754 million based on the exchange rates of 2000), including Ukraine’s in-kind contributions of USD 50 million. Following the pledges, as at 31 October 2003 the contribution agreements between the Contributors and the EBRD amount to some €615 million. The payments received to the CSF totalled some €480 million by the end of November 2003.

Although a large part of the fund is still uncommitted, the Bank indicated that there is a possible shortfall when considering the initial pledge of some USD 717 million and the current cost estimate by the PMU consortium for the project, which amounts to USD 995 million. The shortfall would amount to some USD 278 million, plus possibly USD 64 million for potential additional work concerning deconstruction activities.

Conclusions : the EBRD reported a good performance of the PMU following its reorganisation in 2002. Phase I of the SIP (stabilization and other short term measures) is complete and Phase II (preparation for conversion into an environmentally safe site) has started. The situation with the nuclear regulator (SNRC) has improved during the reporting period. However regulatory approvals remain one of the major risks as they are on the critical path or are closely linked to activities which have the potential to become critical. It is therefore essential that SNRC 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 co-ordinated approach to the overall waste problem is being developed which requires a strong involvement of the Ukrainian authorities. In particular, a solution for the high level radioactive solid wastes needs to be worked out. For this class of waste it has been proposed to rely on part of the EC funded Industrial Complex for Solid Radwaste Management (ICSRM) project originally dedicated to the decommissioning of the Units 1 to 3. This is under investigation but will, in any case, imply additional cost and delays. The TACIS Nuclear Safety programme may have to assist in supporting these additional costs .

The schedule for the completion of the Shelter Implementation Plan, which had been foreseen for 2007, is significantly delayed. The completion of the project, with the commissioning of the New Safe Confinement, is now foreseen for the third-fourth quarter of 2008. The baseline cost of the project did not increase significantly, however, inclusion of required works not foreseen in the initial budget (€28 million), potential additional works (€64 million), addition of escalation, risk and contingency (€194 million), may bring the total to over 1 billion euros .

Considering that the pledges during the two donors’ conferences amount to some UDS 717 million, there is currently a shortfall for completion of the project in the order of USD 278 million (excluding €64 million for potential additional works). The EBRD will require new commitments from contributors prior to the signature of the contract for the New Safe Confinement, which is currently scheduled for the fourth quarter 2004. However the payment of the new contributions would only probably be required by

2006-2007.

COM(2004)0481
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EUR-Lex
OJ C 240 28.08.2001, p. 0157 E
COM(2001)0251

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COM(1999)0470

Decision 1998/381
OJ L 171 17.06.1998, p. 0031

OJ C 138 04.05.1998, p. 0202-0221
T4-0222/1998

Debate in Parliament

T4-0222/1998

A4-0076/1998
OJ C 138 04.05.1998, p. 0004

A4-0076/1998

EUR-Lex
OJ C 364 02.12.1997, p. 0016
COM(1997)0448

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COM(1997)0448