The agreement was signed on June 9 in the Ukrainian capital, Kiev, by Ukraine’s Minister of Fuel and Energy Yury Boiko and Russia’s head of the state nuclear corporation Rosatom, Sergei Kiriyenko.

The deal sees Russia unfreezing the construction of Units 3 and 4 at Khmelnitsky Nuclear Power Plant (NPP) – a site located 40 kilometres from the city of Rovno, in Ukraine’s Khmelnitsky Region. The plant was built in 1981.

Construction of the unfinished units started in 1985 and 1986, respectively, and was halted after the worst nuclear catastrophe to date occurred on April 26, 1986, at another Ukrainian nuclear power plant, Chernobyl.

According to the Ukrainians, the two unfinished reactors are, as of today, completed to a level of 75 percent and 28 percent, respectively. Experts, however, are doubtful as to the reliability of assessments regarding the condition of concrete structures at the site, which were laid down as long as a quarter of a century ago.

Construction will follow an obsolete design

The tender for the completion of the two reactors was won in 2008 by the Russian entity Atomstroiexport – a Rosatom structure which is in charge of the atomic authority’s intergovernmental cooperation agreements and handles construction of nuclear reactors abroad. The design in question is called AES-92 (or NPP-92) and envisions reactor models VVER-1000, type V-39 2B (in Russian designation).

The Russian abbreviation VVER stands for “water-cooled, water-moderated energy reactor.” VVERs are a series of pressurised water reactors developed by the USSR and are still in use in several former Soviet republics, members of the former Communist Bloc, and certain other countries.

The earliest VVERs were built before 1970. The VVER-1000 design was developed after 1975 and is a four-loop system housed in a containment-type structure with a spray steam suppression system. Still, the project to be completed at Khmelnitsky NPP, the NPP-92, is anything but modern – it was put together in the 1990s – and does not meet up-to-date safety requirements. This is why later it was further elaborated for a tender for construction in Finland and renamed NPP-99.

Environmentalists take a dim view of the new deal

At the signing ceremony in Kiev, Ukraine’s Boiko said:

“I am certain that this step will see the support of the nations of both countries, as it is a contribution toward further integration and ensures a high level of strategic partnership.”

This statement may well be in conformity with the whiffs of political thaw that can be traced in Russian-Ukrainian relations since President Viktor Yanukovich, seen as a rather reliable Kremlin ally, took over from the pro-Western ex-President Viktor Yushchenko in a highly competitive election of February 2010. The clear political shift in Ukraine last winter effectively put an end to Russia’s worry about its neighbour’s “Orange Revolution” tendencies and paved the way toward a less strained relationship with the Russian government.

But non-governmental organisations in Ukraine do not quite see eye to eye with the energy minister.

“So dependency on Russian gas seems to be not enough for the Ukrainian government. Now, contrary to the opinion held by most Ukrainians, it wants to create credit and nuclear dependencies on top of that, by building two more reactors that nobody needs,” Andrei Martynyuk told Bellona. Martynyuk heads the council of the NGO Ecoclub in Rovno.

“This completing business is out of the question. Firstly, the concrete structures, which were built over twenty years ago, have been seriously corroded, and secondly, they were designed for another kind of reactors altogether,” Martynyuk said.

Similarly, Artur Denisenko, who coordinates the energy programme of the National Ecological Centre of Ukraine, finds holes in the nice new-life-brought-to-old-NPP story.

Speaking with Bellona from Kiev, Denisenko said: “The project of completing [Reactors 3 and 4 at Khmelnitsky NPP] bears no common sense. As of today, Ukraine already has an excess of generating capacities, and because of the [economic] crisis, energy consumption has fallen even further.”

“For instance, last winter, meaning, during the period of peak consumption, five out of fifteen reactor blocks were for various reasons not supplying energy to the grid,” he continued. “Ukraine must direct its efforts toward enhancing energy efficiency, modernising the capacities already in existence and the economy in general, not build new dangerous reactors.”

Russia to pay for the nonsensical endeavour

According to media reports, both the Russians and the Ukrainians will be providing funding for the project. Russia has taken on the obligation to invest between $5 billion and $6 billion. These funds are to cover the costs of services and items produced in Russia. But it is unclear for how long and on which terms exactly the export credit will be extended to Ukraine.

In point of fact, it was Russia, too, that paid for the completion of Reactor Unit 2 at the plant. Construction on that reactor started in 1983. Then, in 1990, the Ukrainian parliament announced a moratorium on new nuclear power plants, during which the main production components were assembled at the site and personnel trained to work at Reactor 2.

Construction at the unit resumed in 1993, but owing to dwindling funding, works were progressing slowly, only picking up the pace again in 2002. The unit was put into operation in 2004. By then, Russia had covered the construction costs of a reactor that had long become the property of a fully independent foreign state: Russia and Ukraine were no longer fellow members of the Soviet Union, which had disintegrated in 1991.

Then again, Russia has the habit of building nuclear power plants on credit, and payments on those credits do not start flowing back to Moscow until ten to fifteen years pass after the reactors are taken online. Such are the terms under which Russia is building nuclear power plants in China and India. This seems extremely unwise, from the financial point of view, for the Russian state, but Rosatom has a strong enough lobbying power at its disposal to convince the Kremlin to keep the corporation in enough money to support such projects.

In Ukraine, Russia will be responsible for what could be called the “nuclear” part of the deal – the reactors per se, the reactor coolant pumps, the coolant pipes, and the heat exchangers. The components that Ukraine is supposed to supply will likely be on the “electrical” side of the agreement. It is possible these will include low-speed turbines produced by the Kharkov-based enterprise Turboatom. But the Ukrainian government is not expected, according to reports, to consider until 2011 the question of providing its own funding to the project, which makes it likely that Russia will also be footing the bill for the Ukrainian-made components as well.

This was effectively confirmed by Russia’s nuclear tsar, Kiriyenko, in an interview he gave to Radio Ekho Moskvy on June 6:

“The Russian premier, when he was in Ukraine, promised this both to the president and premier of Ukraine, that Russia will be ready to provide financial support as well, and this is not something of an exclusive nature. In fact, when we supply nuclear power plants abroad, we always provide credit support. It is just that with our usual partners, we only issue the credit covering the Russian supply, and with regard to Ukraine, we are ready to issue credits covering both the Russian supply and the Ukrainian supply, because otherwise, the state that the Ukrainian budget is in will not allow [construction to happen],” Kiriyenko said during the broadcast.

“So what we are having talks about right now is that, if everything goes well in the near future, [the project] should be completed, the construction [should be finished] of the two units at Khmelnitsky NPP, [as] this is billions of dollars in investments into Ukraine today.”  

To sum up, the recent developments mean that Russia will build two more reactors in Ukraine to an obsolete design developed in the last century; Russia will pay all expenses; Ukraine will get two second-rate reactors and all the risks associated with potential accidents at the site; and Ukraine will also assume the burden of a state debt that Russia will be free to use as leverage to wield real economic or political influence over its neighbour in the future.