EBRD conditions "unacceptable"

1 January 2002

Ukrainian prime minister Anatoly Kinakh said the country wasn't prepared to meet the conditions laid down by the European Bank for Reconstruction and Development (EBRD) for a $215 million loan to complete the Khmelnitski 2 and Rovno 4 units.

Following the decision, Ukrainian first deputy prime minister Oleh Dubyna and Russian deputy prime minister Viktor Khristenko signed an agreement for the completion of the two VVER 1000 reactors. Russian president Vladimir Putin said the funds had already been included in his country's budget for 2002.

Although Ukrainian president Leonid Kuchma said the agreement "did not exclude" further negotiations with the EBRD, he described the conditions laid down by the EBRD as "unacceptable". In particular, he pointed to the requirement to raise electricity tariffs by about 30%. Kuchma's administration also pointed out that the size of the EBRD loan — $1.48 billion — was almost three times the sum needed, with $2 billion to be repaid over the next 21 years.

The EBRD said it was unlikely the project would be rescued. Spokesman for the EBRD Jeff Hiday said the project could no longer exist in its present form. According to EBRD rules, the issue should have been concluded by December 7, 2001, otherwise a new document must be developed from scratch.

The EBRD has, however, agreed to form a working group with Ukraine on funding for the reactors, which are 85-90% complete.

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