Project number:


Business sector:

Power and energy

Notice type:


Environmental category:


Approval date:

06 Jul 2004



PSD disclosed:

06 May 2004

Project Description

In 2000 the Bank considered a project to finance the completion of two partially built nuclear units at Khmelnitsky and Rivne nuclear power plants in Ukraine, as part of the G-7's support for the decision of Ukraine to close Chernobyl. That project is no longer under consideration by the Bank.
The current project would finance the post-start-up component of a safety and modernisation programme developed for unit 2 at Khmelnitsky (K2) and unit 4 at Rivne (R4) in Ukraine. Both units are the VVR1000 (1,000 megawatt) model and are expected to be put into operation in 2004.
The safety and modernisation programme was developed between Ukraine and the international nuclear community in 2000. It comprises a series of measures designed to be implemented before and after start-up. The proposed EBRD loan would finance only the post-start-up component, which includes about 70 measures.

Transition Impact

This project focuses on nuclear safety.
Key conditions for the Bank's loan include:
  • Both units must achieve previously agreed nuclear safety levels before start-up and;
  • The post start-up safety and modernisation programme for both units must be completed in full.
Additionally, steps must be undertaken to ensure the safety of all nuclear units in Ukraine. This includes raising sufficient funds (based on an agreed tariff-setting methodology) for:
  • Safety upgrades of the 13 existing nuclear power units in Ukraine, using K2 and R4 as benchmarks;
  • An internationally agreed nuclear liability and insurance regime;
  • A decommissioning fund.
Finally, steps to safeguard the independence of the State Nuclear Regulatory Committee of Ukraine (SNRCU) are required.
The project is also expected to have a positive transition impact by promoting the smooth functioning of Ukraine's wholesale electricity market, which will in turn contribute to the attainment of the nuclear safety objectives.
Other key elements of the project that will promote a positive transition impact include:
  • The establishment of acceptable cash-collection rates for the state nuclear operating company, Energoatom, and for the wholesale electricity market.
  • The transparent application of Energoatom's tariff methodology to facilitate the establishment of tariffs which allow for full recovery of all Energoatom operating costs.
  • Continued transparent distribution of the revenues collected in the energy sector.
  • Support for measures to strengthen the independence of the National Electricity Regulatory Commission (NERC), which sets tariffs.

The Client

The beneficiary of the loan will be the Ukrainian state nuclear operating company, Energoatom.
Energoatom operates and maintains Ukraine's nuclear power plants which represent nearly half of Ukraine's available electricity generating production.

EBRD Finance

A sovereign-guaranteed loan of up to US$ 50 million by the EBRD, with the European Commission's Euratom agency expected to provide parallel financing. Final allocation between the lenders to be agreed.

Project Cost

US$ 150 million

Environmental Impact

1. Screening categories and rationale for classification

The project has been classified B1, based on the relatively limited scope of the project and its likely environmental impact, as set out in the EBRD's Environmental Policy (2003).
A B1 project requires an Environmental Analysis of the project and Environmental Audits of the two facilities (Khmelnitsky Nuclear Power Plant, KNPP and Rivne Nuclear Power Plant, RNPP).
As part of the due diligence for the originally considered (2000) K2R4 project, environmental due diligence was conducted based on a scope of work that included completion, rehabilitation and pre and post start-up modernisation of both units. That work was screened A1.
By comparison, the environmental impact of the post start-up modernisation programme alone is much more limited.
For the current screening (B1), the Bank has made use of two recent studies commissioned to assess how the current situation compares with the previous studies.
These studies are:
  • Technical Support Organisation support to the State Nuclear Regulatory Committee of Ukraine in the Licensing of Khmelnitsky 2 and Rivne 4 NPP Units - follow-up (phase 1). Technical Report 1, Task 1, carried out by Riskaudit Report No.593 (2004); and
  • K2R4 Project: Review of Environmental Due Diligence carried out since 2000, carried out by Mouchel Parkman (2004).
2. Information reviewed

Several components of the environmental due diligence carried out prior to 2000 are still relevant for the current project. These include:
  • Environmental Impact Assessment for Completion of Rivne Unit 4 Nuclear Power Station (1998)
  • Environmental Impact Assessment for Completion of Khmelnitsky Unit 2 Nuclear Power Station (1998)
  • Environmental Impact Assessments for Completion of Rivne Unit 4 and Khmelnitsky Unit 2 Nuclear Power Stations. Addendum. Environmental Impact of the Non-Nuclear Alternative (1998)
  • Environmental Impact Assessments for Completion of Rivne Unit 4 and Khmelnitsky Unit 2 Nuclear Power Stations. Addendum. Supplementary Information (1998)
As a result of the EIAs and Addenda, Environmental Action Plans (EAPs) were developed for both plants in 2000. These EAPs mainly prescribed actions to be addressed either as part of completion of the units or as requirements under the national permitting process (OVOS). To assess progress made with regard to these EAP actions EBRD commissioned a review K2R4 Project: Review of Environmental Due Diligence Carried out since 2000 (2004).
As required for B1-screened projects, the following studies were carried out:
  • Environmental Audit of Rivne NPP; by Mouchel Parkman (April 2004)
  • Environmental Audit of Khmelnitsky NPP; by Mouchel Parkman (April 2004)
  • Environmental Appraisal of Modernisation Measures; by Mouchel Parkman (April 2004)
3. Environmental issues

Environmental issues associated with the post-start-up modernisation project concern:
  • any issues identified during the "Environmental Appraisal of Modernisation Measures"
  • any issues identified during the environmental audits and the "Review of Environmental Due Diligence Carried out since 2000".
3.1 - Environmental issues directly related to the Modernisation Measures

The modernisation project encompasses about 70 measures. The consultants concluded that:
  • none of the proposed measures are likely to result in significant negative environmental impact;
  • any environmental impacts of the proposed measures can be minimised through the implementation of effective working procedures during maintenance and repair and for the subsequent management and disposal of waste materials.
  • 12 could have a possible direct impact on the environment. Of these, the assessed impacts of 11 are related to the disposal of equipment arising from modernisation, maintenance and repair activities; 
  • 28 were likely to reduce the risk of accidents occurring and/or the subsequent consequences;
  • 18 may have possible implications for occupational radiation exposure and will thus require adherence to ALARA principles.

3.2 - Environmental issues related to KNPP and RNPP

Both plants were subject to a general environmental audit carried out in April 2004 (see also section 2. Information Reviewed). For each site, the audit included an assessment of Structure of Environmental, Health and Safety Management; Policies, Procedures, Training and Supervision; Radiation Protection; Health and Safety; Environmental Monitoring and Control; Emergency Planning; Reporting; Liaison with the Public.
Environmental, Health and Safety Management
Kmhelnitsky and Rivne Nuclear Power Plants have implemented effective systems for management of environmental protection, radiation protection and health and safety. In each plant, there are dedicated departments for Environmental Protection and for External Radiation Control, a Radiation Safety Shop responsible for radiation monitoring and control within the NPP, a Labour Protection Department and an Emergency Management Department. Evidence was provided which demonstrates that policies, procedures and instructions have been approved, are supervised effectively, and that the results are fed back into associated training activities. The consultants recommended that interaction between the separate departments could be improved.
Policies, Procedures, Training and Supervision
The management of environmental, health and safety and radiological protection at both KNPP and RNPP is based on well defined policies ('Reglaments'), procedures and specific instructions. Reglaments are approved by Energoatom and by regulatory authorities.
Both KNPP and RNPP have training centres dedicated to training of staff according to their specific work activities. The KNPP centre has 45 qualified trainers and provides annual training to approximately 4,000 staff plus contractors; the respective figures for RNPP are 30 trainers and approximately 2,500 staff.
Radiation Protection
Radiation protection of NPP staff at both KNPP and RNPP is the responsibility of the Radiation Safety Shop. There are well established systems and procedures for radiation protection, in line with the requirements of the regulatory authorities, and based on ALARA principles. Some of the operating instructions may need to be changed to allow for additional operational units. Radiation exposure monitoring and dosimetry recording systems appeared to be functioning effectively.
Health and Safety
Both KNPP and RNPP operate Labour Protection Departments with trained staff inclusive of inspectors. This area is well regulated, with clear management functions and procedures. There is induction training for labour protection. Control of NPP staff appeared to be effective, but control of contractors and induction of visitors would benefit from further improvement.
Environmental Monitoring and Control
Both KNPP and RNPP have effective systems for monitoring and controlling radioactive discharges to the environment. There is extensive routine monitoring at the NPPs and within a 30 km radius of each NPP. There have been no exceedences of reference limits in recent years. Information on the relevant radiation background (based on the monitoring results) is regularly provided to the local population.
Procedures for monitoring and control of non-radioactive discharges are similar to those for radioactive discharges. The audits found no evidence of exceedences of permissible limits.
An important resource issue for both plants is cooling water. KNPP uses a cooling reservoir which can be supplemented by pumping from the River Goryn, although this is not expected to be necessary even with an additional second operational unit. RNPP uses water from the River Styr as make-up water for its cooling system. With unit 4 operational the current extraction permits might need to be extended for summer periods. The consultants suggested that plans for an effective river flow monitoring system should be completed to allow for effective water extraction control at periods of low river water flow.
Regarding management and storage of radioactive waste KNPP has two storage areas with sufficient capacity to accommodate all radioactive waste produced by units 1 and 2 for the whole of their life. There is presently no waste-processing facilities at the site, although the radioactive waste-management programme agreed with the regulatory authority includes a radioactive waste-management processing facility.
To solve problems with storage and processing of existing and new liquid radioactive waste at RNPP the commissioning of R4 provides for construction and operation of a complex for processing of radioactive waste. Storage facilities for solid radioactive waste appear to have sufficient capacity prior to completion of the new processing complex. Additionally, a program for waste reduction and treatment has been adopted which is already resulting in the reduction of waste arisings and will allow for the transportation of waste to special storage.
Emergency Planning
KNPP has an emergency plan that has been revised to take account of the operation of unit 2 and is currently being reviewed by the regulatory authorities. At the time of the audit it was subject to approval by the regulatory authority. The plan includes emergency procedures, including staff training and regular testing of the plan. There is an emergency shelter for staff on site, but it was designed for access by staff from unit 1. An emergency shelter for unit 2 is under construction. An on-site Emergency Control Centre exists but requires improvement to its communications facilities. It is planned to have an off-site ECC operational prior to commissioning of unit 2. An automated system for environmental radiation monitoring in both normal and abnormal operating conditions (ASKRO) is under construction.
RNPP has an emergency plan which includes provisions for unit 4. It is approved by the regulatory authority. The plan includes emergency procedures, staff are trained in the relevant emergency actions and the plan is tested on a regular basis. Shelters exist at the NPP. The existing Emergency Control Centre at the NPP site will be supplemented by an offsite ECC. RNPP is currently installing an ASKRO system, but this is unlikely to be fully functional before R4 is fully commissioned.
Both KNPP and RNPP have an effective system or reporting to Energoatom and regulatory authorities on matters associated with radiation protection, environmental protection and health and safety.
Liaison with the Public 
Both KNPP and RNPP have an effective ongoing liaison with the local population, making use of local newspapers and local TV, and provide regular information on radiation background and emissions.
4. Standards

The facilities will need to meet all relevant national, EU/WBG and international industry standards and requirements (e.g. Euratom; IAEA). This will be a condition of the EBRD loan.
5. Environmental Action Plan

Environmental Action Plans are currently being developed jointly with Energoatom, based on the results of the Environmental Analysis and the Environmental Audits referred to in 3.1 and 3.2 above. These EAPs will list agreed actions agreed and will be covenanted. Implementation will be monitored by the Bank.
6. Disclosure of Information and Consultation 

For the EBRD project the Bank's B level disclosure requirements will be met.
7. Monitoring and Reporting 

The project will be subject to EBRD's standard reporting requirements (annual environmental report prepared by the client), plus immediate notification in case of any material incident or accident.
The EBRD will actively monitor the project, particularly the implementation of the Environmental Action Plans.

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