Cernavoda 2 NPP in Romania:
A Test Case for the Coherence of EU Policies in Accession Countries
Campagna per la riforma della Banca mondiale
May 2003
E-mail: info@crbm.org
Web-site: www.crbm.org
Antonio Tricarico
Campagna per la riforma della Banca mondiale
May 2003
The project of completion of the second 700 MW CANDU reactor of the Cernavoda
nuclear power plant in Romania is doubtless a crucial test case for Euratom and
European bilateral financiers, such as Export Credit Agencies (ECAs), as regards
the definition of their nuclear policies for the coming years. In particular, it
is the last project that could benefit from Euratom support before the proposed
extension of the Euratom loan ceiling. As a matter of the fact, Euratom is
considering to concede Romania a 223 million ? loan, the exact amount of money
which is left and not committed in Euratom's treasury. A final decision by the
European Commission on the controversial loan is expected in the next weeks,
since the loan request is already at the interservice of the Commission. This
will decide on Euratom loans on the proposal of Commissioner for Economic
and Monetary Affairs after technical screening of the loan on safety,
environmental and economic grounds with the involvement of DG Enlargament, DG
Environment and the European Investment Bank respectively. The Romanian
government should be able to issue a sovereign counter-guarantee as requested
under the Euratom loan mechanism in June 2003. The delay is due to the ceiling
on guarantee imposed by the International Monetary Fund onto Romania in order to
reduce the risk of generating an unsustainable debt for the country in the
long-term. Nevertheless, Romania will not be able to issue further guarantees
for attracting further investment in other sectors in the next years because of
its extensive financial commitment for the Cernavoda 2 - more than 600 million ?
in counter-guarantee - in a time when the country still faces a hard economic
situation.
ECA Operation Amount Applicant Exporter
EDC (Canada) Investment insurance 316 million CAN (=269 mil. US$)
Societé Generale de France's loans AECL
SACE (Italy) Investment insurance 118 million ? Societé Generale de France's
loans Ansaldo Energia
COFACE (France) Credit Guarantee 23 million ? Alstom
-
Eximbank (US) Credit Guarantee 24 million US$ Nexans/General Electric -
Societé General de France arranged private commercial loans for a total amount
of 384 million ?, of which 350 million ? from Societé Generale of France, 25
million ? from Romanian Development Bank (which is Societé Generale in Romania)
and 9 million ? from Credit Lyonnais of France.
The Romanian government is also contributing to the project with 80 million US$
from the State budget, thus leading the estimated overall cost of the completion
of Cernavoda 2 NPP to more than 700 million ?. Any cost over-run will be covered
by the Romanian government.
The Romanian government is planning to issue the following counter-guarantee:
- 433 million US$ (split into two parts: December 2002, March 2003) to cover ECA
lending;
- 233 million ? in June 2003, to cover the Euratom loan.
Last January the four ECAs involved in project financing have approved their
guarantees for private commercial banks and exporters. The approval has been
made conditional to the fulfilling by the Romanian government of a set of
conditionalities during the construction period and before the start-up of the
reactor. Apparently these conditionalities have been attached to an
Inter-Creditor Agreement signed by the four ECAs, Societé Generale, AECL and
Ansaldo at the end of 2002. To date ECAs have refused to make public such safety
and environmental conditionalities and US NGOs have formally requested Eximbank
their disclosure under the Freedom of Information Act procedure. According to
what international NGOs understand, environmental conditionalities include the
finalisation of several safety, seismic and other studies for the controversial
project.
The 700 million ? Cernavoda 2 project is not a greenfield
project, since works on it has begun under Ceausescu regime, but, as in the case
of the first reactor of the plant, functioning since 1996, the second unit can
be completed only through the support of foreign financing. At the same time,
the core of the nuclear project still has to be implemented and apart of civil
and electrical equipment most of the work on the second reactor has been carried
out through assistance and equipment already in place for Cernavoda 1. A
consortium including SNN, the state-owned nuclear company and lead project
sponsor, AECL of Canada and Ansaldo Energia of Italy is implementing the
completion project.
The granting of the Euratom loan to the Romanian government would be in clear
violation of the Council guidelines for granting Euratom loans to certain non-EU
countries since they are not supposed to be used for the building of new
reactors. The European Council decided in 1994 "to authorize the Commission to
contract Euratom borrowings in order to contribute to the financing required for
improving the degree of safety and efficiency of nuclear power stations in
certain non- member countries" , but not explicitly in support of the
construction or completion of new nuclear reactors, as in the case of Cernavoda
2.
It seems clear that Euratom loans are to be used for safety upgrades of existing
reactors and not the building of new reactors. This interpretation - that the
loans are meant for older Soviet designed reactors - seems to be shared by the
Commission in their new Communication, which is trying to argue the case for
more Euratom funds: "However, especially as the issue of the safety of Soviet
designed nuclear power stations becomes ever more acute, there will be pressure
to further extend Euratom coverage and hence a need for increased provisioning.
Potential new Euratom commitments could be in the order of ? 200-300 million a
year. Any further Euratom lending will also require raising the ceiling for
Euratom loans which is subject to a separate legislative procedure" . This
document does not either mention that funds would be applied to the building of
new reactors.
Since 1999 Euratom commissioned through the PHARE programme of the European Commission four studies concerning environmental, safety, economic and financial aspects of the Cernavoda 2 project. Only the environmental study has been made public so far, despite reiterated requests of civil society in European countries and Romania to make all the studies public. The European Commission has made clear to NGOs that the economic and financial documents cannot be made public because of their commercial confidentiality, even though the economic study is currently under review by the European Investment Bank which manages European taxpayers' money. As concerns the safety study, already approved by the European Council nuclear expert group in July 2002, it is still unclear whether the European Commission is in favour of its disclosure .
In any case, the publication of and public consultation about
the PHARE funded project studies alone will not be able to guarantee the safety
of the projects and that the Romanian government will properly implement and
manage the project in its entire lifetime. The Romanian Nuclear Regulator, CNCAN,
told NGOs that a new EIA is not mandatory for Cernavoda 2 since the whole plan
of construction of the Cernavoda NPP, consisting of 5 nuclear reactors, was
licensed at the beginning of the '90s. It does not matter that more than 140
changes occurred in the project design of Cernavoda 2 to date. Such
interpretation of the Romanian openly conflicts with the environmental licensing
procedure carried out by the Romanian Environment Ministry in the last months.
It has to be noted that according to the Western European Nuclear Regulators'
Association in the last ten years the CANDU design has not changed
fundamentally. "The basic safety features of the CANDU 600 concept have not
developed very much over the years. When construction of Unit 1 restarted in
1991, design improvements were introduced similar to those already implemented
in the twin plants of Wolsung (South Korea), Point Lepreau and Gentily-2 as a
result of their operating experience and PSA studies. The main improvements
include better separation between control and shutdown system, modification of
control room design, provision for post LOCA sampling capability in the
containment, etc." Principal safety problems as the positive void coefficient
of reactivity, vulnerability to loss of regulation incidents, containment
deficiencies, seismic hazard and fire protection are not totally solved. (see
Section 2)
According to the energy chapter of the 2002 EU Regular Report for Romania from
DG Enlargement of the European Commission, "The unresolved issues of spent fuel
and nuclear waste will have to be addressed [by the Romanian government] in the
short-term" and although "Romania has accepted and addressed all the
recommendations contained in the Report on Nuclear Safety in the Context of
Enlargement of June 2001" and "no major difficulties were foreseen for
compliance with the Euratom Treaty, Romania should implement some international
nuclear norms. Nuclear safety standards, especially those related to plant
operation, should be handled appropriately and longer-term solutions needed to
be found for radioactive waste." (see Annex 1)
The publication of all Euratom-funded studies is quite
crucial since these are complementary to the fully inadequate Environmental
Assessment Summary which has been produced by AECL of Canada, one of the foreign
sponsor of the project, and the official Environmental Impact Summary carried
out by the National Institute of Research and Development for Environmental
Protection in Bucharest (ICIM) on behalf of the Romanian State-owned nuclear
agency, SNN Nuclearelectrica. Both the documents are available only in a summary
format and not as a full version because of apparent commercial confidentiality
of some information contained in the documents. Only recently Romanian
authorities have made available to international NGOs after their reiterated
requests relevant parts in Romanian of the full EIA study carried out by ICIM.
(see Section 1)
The AECL study, made public at the end of 2001 in order to comply with
environmental requirements of EDC of Canada, fails to properly consider
alternatives to complete the Cernavoda 2 reactor, to assess the consequences of
a catastrophic nuclear accident and the security provisions, to disclose details
of the nuclear emergency plan and the complete nature of the seismic risks, and
to finally conduct an adequate Probabilistic Risk Assessment.
According to the independent review of the authoritative Austrian Institute for
Applied Ecology, the summary of official Romanian EIA study made public by the
Romanian government last August, is incomplete, not systematic, not
understandable because of the lack of relevant maps and data included in the
full version of the document, so that it is impossible to evaluate whether all
needed data have been collected and all project impacts seriously assessed by
EIA authors.
According to the Romanian Law on the Environmental Protection
of 1995 and the associated implementing procedure, the Romanian "accepted [EIA]
report shall be subjected to public debate by the local EPA and shall record the
comments and conclusions resulted" . In September 2001 an unofficial
presentation of the project by AECL and SNN officials took place in Cernavoda,
Constantza and Medgidia. It should be noted that these meetings have been
attended mainly by representatives of pro-nuclear NGOs which have been
established by officials from the national nuclear agency in the last years, as
per their admission to the international NGO Fact-Finding Mission (FFM) in
February 2002. Representatives of the Romanian Environmental Ministry made clear
to the FFM that those meetings could not be regarded as official consultation
since the official EIA study of the project had not been made public yet at that
time.
Subsequently, during meetings a new international NGO FFM to Romania last
January nuclear and environmental authorities claimed that no additional
consultation were to take place since the official ones had already occurred and
were based on the first draft of the EIA of the project prepared by AECL..
To this respect, it should be noted that the full EIA study by AECL was not made
available to local environmental authorities in charge of organising the
consultations in Romania, although it should have been given as part of the
environmental agreement issuance procedure. A follow-up visit to the local
authorities in Constanta in February 2003 proved that the report distributed to
consultation participants was quite different from the Environmental Assessment
Summary made public by AECL and have not got the same structure either. In
particular, the two studies include a different assessment of estimated future
energy needs in Romania. Furthermore, all the references to economic
justification of the nuclear project and non-nuclear alternatives included in
the AECL summary, even though in a limited and inadequate manner, are not
included in the Romanian document, although a study of the alternatives, taking
into account the associated environmental impacts, is essential for the public
to appreciate the necessity and the relevance of such a project. This is also an
explicit requirement under the Permitting Procedure for economic and social
activities having an environmental impact according to the Romanian
Environmental Protection Law No. 137/1995. Therefore, international NGOs have
serious doubts whether the public consultation has been based on appropriate
information on the project.
In follow-up correspondance with authorities from the Romanian Environment
Ministry, when these have been asked why SNN commissioned a second study this
time to ICIM and why this document was not subject to the proper procedure,
namely not resubmitted to public consultation at its completion, the Romanian
authorities admitted that the public consultation had been based on "illegal"
EIA documentation, that "a second study was asked because, according to national
legislation, the environmental impact study (EIS) has to be made only by a
natural or legal person certified according to Minister Order (MO) 278/1996 and
the EIS has to be done according to the MO 125/1996 requirements." (see Section
1). Thus Romanian authorities recognised that the AECL was not certified to
carry out such a study and that the EIS made by them did not meet the national
requirement in this matter. Consequently the final and official EIA study is the
one produced by ICIM which has not been sumitted to public consultation as
requested under the Romanian environmental law, EU law and international
environmental recognised standards.
As suggested by environmental experts of the EU delegation in Bucharest and
requested to Commissioner Wallström by international NGOs (see Annex 2), it is
needed to urge Romanian authorities to fully implement the new Environmental
Protection Law which entered into force on January 17th, 2003 by adopting the EU
directive 85/337/EEC as amended by the 97/11/EC Council Deirective within the
accession process. Consequently the European Commission should request Romanian
authorities to hold new consultations with project affected communities on the
ICIM full EIA study as a condition for the approval of the requested Euratom
loan. Going ahead with project financing without expecting the outcome of public
consultation with local affected communities and international civil society on
the full official EIA study for the project would be a clear violation of the
principles of the European Union's environmental law and a terrible example
given to an accession country, such as Romania, which has been requested by the
European Union itself to live up its environmental rules to European standards
as a pre-accession condition.
Finally the FFM was denied access to the nuclear power plant in Cernavoda in
January 2003, after providing in advance nuclear authorities with all needed
information. While reacting to the Mission's complaints about the modalities by
which the mission was diverted to the Cernavoda site and then not allowed to
visit the plant, Mr. Chirica, director of the SNN international affairs
division, bluntly stated on-the-record its full lack of interest in the
possibility that the FFM had reported to the European Commission and national
governments involved in project financing about the unfortunate case. Such
attitude by Romanian high-ranking authorities requesting the concession of the
Euratom loan poses a serious question about the reliability and credibility of
the whole Romanian government in properly implementing the controversial nuclear
projects also with the support of EU funding.
The financing of the Cernavoda 2 NPP project under current
situation might be in violation also of international environmental law. In
particular, Romania and all its neighbouring countries, apart of the Serbian
federation, have all signed and ratified the Espoo Convention on EIA in a
Transboundary Context, which came into force in 1997 and to which also the
European Commission is party. It should be noted that the Cernavoda NPP is
located less than 50 km from the Romanian border with Bulgaria and that this
country has been insistently requested by the European Union to close four
nuclear reactors at the Kozloduy NPP on safety grounds. The Bulgarian government
has been notified by the Romanian government about its intention to go ahead
with the project and the project EIA study only at the end of 2002, after the
completion of the EIA study, thus in violation of article 3 of the Convention.
Furthermore, Bulgarian authorities received only the ICIM EIA summary, which is
insufficient to fully evaluate transboundary impacts associated with the
Cernavoda 2 project. (see Sections 1 and 2).
After receiveing several NGO submissions and extending the timeline for
comments, finally Bulgarian authorities sent their comment about the ICIM EIA
Summary to the Romanian government last April. Outstanding problemsregarding
environmental transboundary impacts associated with other projects and affecting
the two countries and the intention of the Bulgarian government to go ahead with
the construction of the Beline NPP, pushed Bulgarian authorities to keep a low
profile in the Cernavoda 2 case vis a vis Romania at the end. A choice that
seems to be passively accepted by the European Commission, in order to minimize
conflicts with the second wave of accession countries for the time being. Such a
political attitude would result in a "lose-lose" situation where two
controversial nuclear projects would be completed in violation of national and
international environmental law, thus avoiding to use these cases as a political
leverage to accelerate the adoption of EU and international rules and standards
in domestic environmental law, as requested under the EU accession process, in
countries which still have a bad environmental record.
However, in a written reply to NGO concerns, Commissioner Verheugen acknowledged
the importance of the Espoo Convention in the Cernavoda 2 case and committed to
monitor developments of bilateral relations between Romania and its neighbours
as concerns the significance of the project in a transboundary context and the
implementation by Romanian authorities of the provisions under the Espoo
Convention. (see Annex 3) By financing the Cernavoda 2 project under current
conditions it would support the violation of international environmental law
that it has been promoting since its inception.
The ICIM study does not address at all outstanding safety
problems of CANDU technology and the necessary improvements, which have been
suggested in several technical mission reports about CANDU reactors in the past
years.
The earthquake risk for the Cernavoda NPP is grossly underestimated by a factor
two, even though Romania is one of the most active earthquake regions in Europe.
Old seismic data and literature have been used in the EIA study without
cosidering significative events occurred in the last ten years.
On the basis of the EIA summary it is impossible to justify the absence of risk
from external events such as flooding, explosions or airplane crash. The
estimation of the overall risk associated with accidents with large radioactive
releases is underestimated comparing with Western European standards and no
sufficient database is provided to verify the transport calculations for the
impact of radioactive effluents into air and water under accident conditions.
Furthermore, all calculations do not include meteorological and precipitation
data. (see Section 2)
Finally, no measure for the permanent monitoring of the water quality and
special protection in case of contamination is provided, even though groundwater
is used for drinking in many villages and towns in the Cernavoda area.
It should be noted that the FFM to Romania of last January detected the complete
lack of independence of the Romanian Nuclear Regulator, CNCAN. The FFM formally
requested separate meetings with the nuclear regulator - which is also the
Secretary of State of the Romanian Ministry of Water and Environmental
Protection - the environmental authorities and the nuclear state-owned company,
SNN. Nevertheless the Mission has been allowed to meet environmental experts
only in a meeting convened by the Nuclear Regulator and at the presence of
representatives of the nuclear company who systematically influenced the
Regulator and the overall meeting, even by wrongly translating the
inyterventions of the environmental authorities.
The real aim of the Cernavoda 2 project is to produce
electricity for export to western European countries and not for matching energy
needs of the Romanian people. As a matter of the fact, the country is still
experiencing a severe economic crises, its energy demand is not increasing
and some of the electricity produced at Cernavoda 1 is being exported. In
particular, Italy has a strong interest in importing additional nuclear energy
produced at Cernavoda, even though nuclear production on the Italian territory
has been banned through a popular referendum since 1987. Quite a clever
expedient to relocate nuclear production and associated risks far away to
Eastern Europe. The option of exporting nuclear energy produced in the future at
Cernavoda has not been excluded by the Romanian Electricity Regulator in its
written reply to international NGOs' concerns. (see Annex 4).
All EIA studies are based on the conclusion of the 1998 Alternatives Study
commissioned by the European commission and never made public. The economic due
diligence being carried out by the European Investment Bank will not be made
public by the Commission as well. No detailed cost-benefit analyses for each of
the options considered in the EIA studies has been produced and the Romanian
government has kept refusing to disclose the production figures documenting
costs at Cernavoda 1 to the public in order to justify the economic viability of
the Cernavoda 2 completion project.
At the same time the Romanian energy system needs immediate interventions in
energy efficiency as regards existing fossil-fuel fired and hydro power plants
and the transmission grid, as admitted by the energy experts of the European
Union Mission in Bucharest to the international Fact-Finding Mission in February
2002. Furthermore, the significant renewable energy potential in Romania has not
been seriously explored to date. (see Section 3).
In any case, it is clear that in the view of Romanian authorities the completion
of Cernavoda 2 would pave the way to the construction of the third and further
units - currently preliminary civil works for three more units are in place at
Cernavoda, after the suspension of construction activities due to the collapse
of the communist regime. As reported by Reuters last February (see Annex 5), the
Romanian government has offered a Korean-Canadian-Italian consortium 10-year
control of a third planned reactor at Cernavoda under a
build-operate-and-transfer scheme, with the aim of turning the European Union
aspirant into a key Balkan power exporter for the more and more liberalised
European energy market. In this way, Romania would avoid resorting to long-term,
state-guaranteed loans as it has done so far. "It would be an easy start for us
to get into the EU's energy market", commented a member of the Parliament's
industry commission in charge of the new nuclear deal, while defining western
CANDU technology safe in contrast with Soviet-era nuclear plants operating or
planned in Eastern Europe.
In the approach followed by Romanian authorities in the case
of the Cernavoda 2 project there is an assumption that the outstanding
environmental issues as well as the issue of spent fuel and nuclear waste in
Romania appear small compared to the safety and closure of nuclear plants in
other candidate countries, such as Bulgaria, so that the European Commission at
the end might tolerate the full development of the Romanian nuclear program in
the next years starting soon with the completion of Cernavoda 2. It is necessary
that the European Commission intervene actively in the Cernavoda 2 case by
delaying the approval of the Euratom loan until when all safety and
environmental standards, both at national and international level, are fully met
by Romanian authorities.
At the same time, under the current situation of the Romanian energy system
requiring non-nuclear energy intervention Euratom financing of the Cernavoda 2
project is not coherent with European Union's environmental and energy policies
and therefore it should be denied to the Romanian government. By approving a 223
million ? Euratom loan for the project the European Commission would inevitabily
lose any political leverage to move the Romanian government to live up its
safety and environmental standards before the accession date of 2007.
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