CELEX: 51992PC0467
Language: en
Date: 1992-12-09
Title: Proposal for a COUNCIL DECISION amending Decision 77/270/Euratom, to authorize the Commission to contract Euratom borrowings in order to contribute to the financing required for improving the degree of efficiency and safety of nuclear power stations in certain non-Member countries

COMMISSION OF THE EUROPEAN COMMUNITIES
                                                 C0M(92) 467 final
                                                Brussels, 9  December 1992
                                   Proposal for a
                                  ÇpUNCIL DECISION
                  amending Decision 77/270/Euratorn, to authorize
                   the Commission to contract Euratom borrowings
          in order to contribute to the financing required for Improving
                            the degree of efficiency and
         safety of nuclear power stations In certain non-Wember countries
                            (presented by the Commission)
<mmt
 ---pagebreak---                                   - 2
                         EXPLANATORY MEMORANDUM
The Community and the Member States have decided to make a concerted
effort at G-24 level to support the process of economic and social
reform undertaken by the countries of Central and Eastern Europe and by
the CIS countries.
Both the PHARE (Council Regulations 3906/89 and 2698/90, in favour of
the countries of Central and Eastern Europe) and TAC IS (technical
assistance to the CIS, European Council Decision of 14 and 15 December
1990, Council Regulation 2157/91) programmes rate energy as one of the
key sectors in the restructuring and regenerating process to improve
the organization and operation of the economy whilst respecting the
principles of a market economy. The stated positions of the Council
have acknowledged that nuclear safety should be one of the priority
areas for technical assistance.
 In those countries of Central and Eastern Europe and of the CIS which
use nuclear energy, it is Soviet-designed nuclear power stations that
are in service and/or under construction. In those countries, nuclear
energy meets the following proportions of electricity requirements: in
the former USSR, 12%; in Hungary, 50%; in Bulgaria nearly 40%; and in
Czechoslovakia, 28%.
The European Council held in Lisbon on 26 and 27 June 1992 invited the
Council to consider granting Euratom loans to contribute to improving
the degree of efficiency and safety of the nuclear power stations in
the countries of Central and Eastern Europe and of the CIS.
The nuclear power stations in service and/or under construction fall
into two quite separate families:
RBMKs (graphite-moderated pressure-tube type boiling-water reactor) and
W E R s (pressurized-water reactors).
 ---pagebreak---                                  - 3 -
RBMKs are located in CIS republics (15 stations, each of 1 000 MW) and
in Lithuania (2 stations, each of 1 500 MW). These reactors are of the
"Chernobyl" type. An extensive debate at international level is
currently under way to examine whether investments could be made to
make them safer and therefore keep them in service, for the time being
at least, or whether they should be closed down and decommissioned.
There are three generations of W E R s :
*   440/230-type W E R s of 440 MW: ten units are still in service, four
     in the CIS (Kola and Novovorone), four in Bulgaria (Kozloduy) and
    two In Czechoslovakia (Bohunice). Moreover, in Armenia there are
    two units which have been shut down for four years and which the
    government wants to bring back into service.
    This    generation of     reactor    is much  criticized,  but   its
    decommissioning would present such serious problems for the energy
    sector and the economy as a whole in the countries concerned (as is
    also the case for the RMBKs) that, subject to carrying out the
    changes agreed at international level, their continued operation is
     indispensable.
    They will probably remain in service for a few more years,
    supported by additional investment tranches of several tens of
    mill ions of ecus.
*   440/213-type W E R s of 440 MW: fourteen units are in service (four
     in the CIS, four in Hungary and six Czechoslovakia) and 4 are under
    construction (Czechoslovakia).
*    1000-type W E R s of 1 000 MW: eighteen units are in service
    (sixteen in the CIS, and two in Bulgaria). There are twenty-five
    units under construction (twenty-one in the CIS, two in Bulgaria
    and two in Czechoslovakia). This generation of reactor is more
    advanced than the others in that it uses a leakproof pressure
    containment shell to surround the nuclear         island; in other
    respects, however, it is still inadequate.
The general level of efficiency and safety in all these power stations
is inadequate. They must be brought up to standard (in full or in
part, according to circumstances) in order to avoid an accident, which
would have serious consequences for the entire continent. If the
countries of Central and Eastern Europe and of the CIS are to carry out
the reforms entailed by the process of economic restructuring, then
they must at the moment retain the electricity production of their
existing nuclear power stations, as other sources of energy fall well
 ---pagebreak---                                 - 4 -
 short of meeting their energy requirements. These countries are
 therefore generally committed to the continued operation of these power
 stations.
 The power stations in question are currently being studied under
 programmes which are being run by the International Atomic Energy
 Agency (IAEA), Vienna and the World Association of Nuclear Operators
 (WANO); the Community is also conducting studies under the PHARE and
TAC IS programmes.
The international community is asked to direct all its expertise at an
exhaustive analysis to identify the design and operational weaknesses
of these reactors. In addition to the emergency projects which have
already been undertaken, such as staff training, housekeeping and
assistance to the safety authorities, the programmes currently under
way will result in proposals for modifying and/or replacing equipment
essential for improving the efficiency and safety of these power
stations, thus enabling their continued operation at an acceptable
 level of safety.
Following the launch of the PHARE and TACIS programmes of assistance,
the Community allocated ECU 72.7 million to assistance for the nuclear
energy sector in 1990 and 1991. This amount breaks down by country as
fol lows:
Bulgaria ECU 12.7 million; Czechoslovakia, ECU 7 million; Lithuania,
ECU 0.5 million; Poland, 0.3 million; and the CIS, ECU 53 million.
The amounts relate only to the study phase, i.e. software, improving
operational safety and support for the safety authorities.
The G-7 meeting in Munich, on 6-8 July 1992, reiterated the importance
of Improving nuclear safety in the countries of central and eastern
Europe and of the CIS.
As part of the TACIS assistance programme, the Commission will propose,
by the end of 1992, an ECU 100 000 000 programme and a programme for at
least the equivalent sum in 1993. The 1992 regional programme should
cover the drawing-up of a five-year steering plan to determine
 ---pagebreak---                                  - 5
 modifications to and close-downs of nuclear power stations, and
 coordinate the work of the G-24 and the multilateral organizations,
 permanent assistance on-site to improve the running and maintenance of
 the units, financing projects of the International Science and
 Technology Centre in Moscow, and pursuing activities of a generally
 similar nature already in hand.
As regards PHARE, the actions started in 1991 will continue,          in
conjunction with TACIS, under an ECU 20 000 000 regional programme.
Bringing the power stations of these countries up to standard will
ultimately depend on carrying out the changes recommended by the
projects and studies currently under way. Work to modify or replace
existing equipment or introduce very costly new sophisticated equipment
must therefore be carried out as it is essential if these power
stations are to continue to operate. The investment required would be
at least ECU 10 000 million, staggered over a period of approximately 8
years.
Moreover, if conversion work on any of the nuclear plant is not
considered feasible in technical or economic terms, that plant will be
closed down and decommissioned.
The scale of the problems involved in the process of economic and
social reform is such that the countries of Central and Eastern Europe
and of the CIS are unable to find the necessary financial resources to
begin the industrial phase of improving the efficiency and safety of
their nuclear power stations.
It is therefore necessary to call on finance from other sources.
The Commission should consider financing via Euratom loans.
Decision 90/212/Euratom fixed the ceiling for Euratom borrowings at
ECU 4 000 million. At 31.12.991, ECU 2 876 million of this limit had
been taken up.
In view of the slowdown in the nuclear energy sector, it is unlikely
that there will be strong demand for the remaining finance from nuclear
energy projects in the Community in the immediate future.
 ---pagebreak---                                 - 6 -
 The community could therefore use a large part of the Euratom borrowing
 facilities currently available to help to improve the efficiency and
 safety of nuclear power stations In the countries of Central and
 Eastern Europe and of the CIS.
 It Is planned to create a guarantee fund to cover the financial
 commitments of the budget to non-member countries. This fund would be
 financed by the payment of 14 % of the capital amount of each new
 transaction. Loans granted to non-member countries under the Euratom
 Decision will be subject to this mechanism as soon as it comes into
 force.
 Since the EIB is already responsible for managing Euratom loans within
 the Community, the Commission and the EIB will Jointly examine ways in
which this remit could be extended to the countries of Central and
Eastern Europe and the CIS.
The application of this Decision to financing improvements in the
degree of efficiency and safety of nuclear power stations In the
countries of Central and Eastern Europe and in the CIS will comply with
the attached guidelines*
Euratom funding for Member States w i n continue to be governed by the
guidelines set out in the Council minutes with regard to the basic
Decision 77/270/Euratom.
 ---pagebreak---                                       - 7 -
                                 Proposal for a
                                COUNCIL DECISION
                amending Decision 77/270/Euratom, to authorize
                 the Commission to contract Euratom borrowings
        in order to contribute to the financing required for improving
                          the degree of efficiency and
      safety of nuclear power stations in certain non Member countries
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
HAVING REGARD to the Treaty establishing the European Atomic           Energy
Community, and in particular Articles 1, 2, 172 and 203 thereof,
HAVING REGARD to the proposal from the Commission,
HAVING REGARD to the Opinion of the European Parliament,
WHEREAS the European Atomic Energy Community was created to establish the
conditions of safety necessary to eliminate hazards to the life and health
of the public; and whereas the Member States have expressed the desire to
associate other countries with their work and to cooperate with the
 international organizations concerned with the peaceful development of
atomic energy,
WHEREAS the Community and the Member States have decided to make a
concerted effort at G-24 level to support the process of economic and
social reform undertaken by the countries of Central and Eastern Europe and
of the CIS, and have decided on measures to give economic aid to these
countries;
WHEREAS these countries have nuclear installations whose level of safety is
inadequate and whose malfunctioning could have repercussions on the entire
continent; and whereas these countries are committed to the continued use
of nuclear energy;
 ---pagebreak---                                      - 8 -
  WHEREAS the Community 16 duty bound to commit the requisite resources to
  enable It to meet the expectations of the public in the Member States in
  terms of the safety and quality of the environment; and whereas, in
  particular, action must be taken in the countries of Central and Eastern
  Europe and of the CIS to modify certain existing nuclear installations or,
  If need be, to dismantle others which it would not be feasible in
  technical or economic terms to bring up to standard,
 WHEREAS projects undertaken by the Community under the PHARE and TACIS
 programmes to improve the level of safety of the nuclear Installations
 comprise inter alia studies to identify areas of weakness and to put
 forward appropriate corrective measures; and whereas the technical
 assistance will result In proposals to modify some of the nuclear
  installations in service or under construction and to shut down end
 decommission others; and whereas it is in ths Community's Interest that
 this work be carried out;
 WHEREAS the Community must encourage these projects to be carried out
 whilst promoting cooperation with Industry in the Member States;
 WHEREAS the investment required to bring up to standard the nuclear
 installations in ths countries of Centrai and Eastern Europe and of the CIS
 is on such a scale that these countries are unable to undertake it although
 the problems require urgent solutions;
WHEREAS there Is good reason for calling on all available financial
 resources; whereas to this end there is good reason for amending Decision
77/270/Euratom, authorizing the Commission to contract Euratom borrowings
 to finance investment in the nuclear energy sector, In order to extend the
scope of the Decision to cover countries Involved in the PHARE programme
and those of the Commonwealth of Independent States so that the efficiency
and safety of their nuclear power stations can be Improved;
WHEREAS Decision 90/212/Euratorn fixed the ceiling for Euratom borrowings at
ECU 4 000 million» and at 31.12.1991 ECU 2 876 million of this limit had
been taken up. and whereas following the slowdown In the nuclear energy
sector and the changes In nuclear energy policy by some Member States,
there wl 11 not be a strong demand for the remaining finance from nuclear
energy projects in the Community over the next few years;
WHEREAS the recipient countries will act as guarantors to the loans granted
by virtue of this Decision, and/or other first-class securities w i n be
obtained,
 ---pagebreak---                                     - 9 -
HAS DECIDED AS FOLLOWS
                                Soie Article
The first Article of Decision 77/270/Euratom is replaced by the following:
"First Article
The Commission is authorized to contract, in the name of the European
Atomic Energy Community (Euratom), and within the limits fixed by the
Council, borrowings whose proceeds will be allocated in the form of loans
to finance, within the Community, investment projects relating to the
industrial production of electricity in nuclear power stations and to
industrial installations in the nuclear fuel cycle.
The Commission is also authorized to contract, within the same limits ,
borrowings whose proceeds will be allocated in the form of loans to finance
conversion work on the nuclear power stations of non-Member countries
involved   in the PHARE programme and those of the Commonwealth of
Independent States (CIS), in order to improve the efficiency and safety of
these installations. For these projects to be eligible they must:
    relate to nuclear power stations or installations in the nuclear fuel
    cycle which are     in service or under construction, or to the
    decommissioning of nuclear installations where modification is not
    feasible in technical or economic terms;
    have received all the necessary authorization at national  level and in
    particular the agreement of the safety authorities-,
    have received a favourable opinion from the Commission in technical and
    economic terms-,
 ---pagebreak---                                    - 10 -
     involve close industrial or commercial cooperation with at   least one
    Community enterprise.
The Commission may borrow only within the limits of loans requested of it.
The borrowing and corresponding lending operations are to be denominated in
the same monetary unit and are to be carried out under the same conditions
as repayment of the principal and interest payments. Costs incurred by the
Community in concluding and executing each operation are to be borne by the
recipient undertakings."
Done at Brussels, (date)
 ---pagebreak---                                    - 11 -
                           FINANCIAL IMPLICATIONS
The draft Decision concerns extending the scope of an existing Decision
(77/270/Euratom): the granting of Euratom loans is extended to investments
to improve the degree of efficiency and safety of nuclear power stations in
certain non-Member countries, under the ultimate guarantee of the General
Budget of the European Communities.
The draft Decision is considered to have no direct affect on the General
Budget, except in the event of default by the recipients or their
governments, who will be asked to act as guarantors.
 ---pagebreak---                                      - 12 -
                     ANNEX TO DRAFT DECISION 92/DEF/EURATOM
               GUIDELINES RELATING TO THE FINANCING REQUIRED FOR
                IMPROVING THE DEGREE OF EFFICIENCY AND SAFETY OF
            NUCLEAR POWER STATIONS IN CERTAIN NON-MEMBER COUNTRIES
                  (Text to be inserted in the Council minutes)
The guidelines contained in the Council minutes relating to Decision 77/270
shall apply to Euratom loans to Member States. As regards operations to
contribute to the financing required for improving the degree of efficiency
and safety of nuclear power stations in the countries of central and
eastern Europe and of the CIS, the Council invites the Commission to follow
the guidelines below.
 I BORROWINGS
a)   The costs involved in contracting the borrowings must correspond to
     those paid by category-one issuers, and the Commission shall take all
     the necessary steps to ensure that the Euratom borrowings benefit from
     the same favourable conditions as those enjoyed by other Community
     borrowings.
b)   Given the type    of investment to be financed, the borrowings must be
     contracted over  as long a time scale as possible; short- or medium-term
     loans may also   be concluded should such a requirement be expressed by
     the enterprises   concerned.
c)   As far as possible, the repayment schedule of the borrowings shall be
     accompanied by a period of grace.
 ---pagebreak---                                      - 13 -
 I I LOANS
1. Technical and economic acceptability of applications
1.1 Types of projects Involved
          The projects must give priority to improving the degree of
         efficiency and safety of nuclear power stations and installations
          in the nuclear fuel cycle which are            in service or under
         construction (cf. points 1.2 and 1.3).
         Projects may also relate to the decommissioning of installations
          for which modification to bring them up to standard is not feasible
          in technical or economic terms and which would pose a safety hazard
          if simply abandoned. The financing granted may relate to investment
         during     the  period   between    shut-down    and  the   start  of
         decommissioning and to the decommissioning measures themselves. The
          financing of decommissioning measures will be considered only where
         no provision to finance these measures has been made during the
         operating life of the installation.
1.2 Obtaining authorization at national    level
     Financing will be granted only to projects which have received the
     approval of the competent national authorities, particularly the safety
     author it ies.
1.3 Obtaining a favourable opinion     from   the Commission  in technical and
     economic terms
     At technical level, the Commission shall examine the extent to which
     the project provides a solution to the safety problem which exists. The
     examinâtio will also include an assessment of the environmental impact
     of the project.
     The Commission's examination shall refer       to the studies on nuclear
     safety carried out by the international      bodies, IAEA and WANO, and
     under the Phare and Tacis programmes, and     shall assess the project in
     comparison with measures implemented in      the Member States to solve
     similar types of problems, taking account     of the recommendations made
     by the international bodies.
 ---pagebreak---                                       - 14 -
   Although    the    list below  is not  exhaustive,  the Council    invites  the
   Commission      to   give  particular   consideration  to  the    modification
   measures below:
         Improving    the containment of the primary circuit     (reactor   vessel
        and primary piping);
         improving    the reactor  cooling  system, particularly   the emergency
         cool ing system-,
         fire detection and extinguishing systems;
         installation of specific and independent alarm systems-,
         improving the reactor protection and monitoring system;
         control room equipment.
    Other measures resulting from the studies under way shall also be taken
    into consideration.
    At economic level, the Commission shall establish that the projects are
    justifiable, by comparing         the economic    characteristics and       the
    efficiency of the projects in question with those of non-nuclear
    alternatives which are potentially available. Investment must relate to
     installations which are economically viable. The opinion shall refer to
    the overall energy plan which has been defined for the beneficiary
    country, in so far as such guidelines exist.
    The economic and efficiency studies shall be based on assumptions which
    reflect the reality of a market economy in terms of both the positive
    financial     flows (price and quantity produced) and the negative
    financial flows (investment costs, cost of factors utilized, etc.).
1.4 Necessity of close cooperation with at least one Community enterprise
    This condition shall be considered to have been met if a major
    proportion of the capital goods item or service which is to be financed
     is provided by a Community enterprise.
 ---pagebreak---                                       - 15 -
       The guarantee of the State on whose territory the project is situated
       shall normally be required, but other first-class securities may also
       be contemplated.
  2.   Limits of loan amounts
  2.1 The Commission shaii grant only loans which supplement those which the
      enterprise has contracted with other parties.
 2.2 The Commission shall limit its loans to 50% of the total cost of the
      projects mentioned in point 1.1 (in one or several tranches). The total
      Community financing for a particular project shall not exceed 50%.
 2.3 in the event of co-financing with the EBRD, the cumulative total of
      Community financing shall under no circumstances exceed 70% of the
      total cost of the project mentioned in point 1.1.
 3. Order of granting of loans
 3.1 Applications concerning the financing of expenditure effected after 1
      January 1992 shall be acceptable.
3.2 The Commission shall use the technical and economic studies to decide,
      if necessary, which projects are to receive priority treatment.
4. other financing conditions
4.1 Currencies
     Loans shad be paid out in several currencies (a combination) or in a
     single currency, according to the recipient's preferences and subject
     to availability. The main currencies used shall be those of the EEC.
     Member States, the ecu, the US dollar, the Swiss franc and the yen.
4.2 Duration
     Loans shall be granted on a medium- and long-term basis, with the
     particular duration depending on the type of project and life of the
     assets financed. The maximum duration of loans shall be twenty years.
 ---pagebreak---                                     - 16 -
 4.3 Interest rates
     The interest rates shall closely follow the cost of the borrowings from
     which the loans are granted, and they shall not vary according to the
     nature or location of the project, nor according to the type or
     nationality of the recipient. Rates shall be set for each of the
     currencies used.
     The loans shall be at a fixed or variable rate, according        to the
     recipient's preferences and subject to availability.
4.4 Reimbursement
     Reimbursement of the loans shall be carried out in line with
     reimbursement of the borrowings utilized. Reimbursements shall be made
     in the same currencies and in the same proportions as the loan payouts.
                                       B
                   ORGANIZATION OF COOPERATION WITH THE EIB
                 (Text to be inserted in the Council minutes)
The Council notes that the rules, which have already been agreed with the
EIB, for Community participation in the financing of investment referred to
in Decision 77/270/Euratom and listed in the Council minutes relating to
that Decision shall continue to apply in respect of investment carried out
in the Member States.
The Commission shall define with the EIB how these rules are to be extended
to apply to the financing of investment aimed at improving the degree of
efficiency and safety of nuclear power stations in the countries of central
and eastern Europe and of the CIS.
 ---pagebreak---                                    _    1 ^   _                      ISSN 0254-1475
                                                               COM(92) 467 final
                                                      DOCUMENTS
EN                                                                         11 12
                                 Catalogue number : CB-CO-92-489-EN-C
                                                             ISBN 92-77-49046-2
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