The EBRD has finally approved a $215 million loan to help with the completion and safety upgrades of Ukraine’s Khmelnitski 2 and Rovno 4 nuclear plants, to replace the capacity which will be lost through the closure of Chernobyl 3.

The project’s total cost is $1.48bn and is expected to include contributions from Euratom ($585 million), export credit agencies ($348.3 million), EBRD ($215 million), Russia ($123.7 million), Energoatom ($158.6 million) and Ukraine ($50 million).

The EBRD’s loan is subject to a number of strict conditions. These are: Confirmation that Chernobyl has been closed permanently.

Several important safety assurances have been received, including a report from international nuclear regulators confirming that Ukraine’s nuclear regulator has the necessary independence and resources to ensure the operation of facilities according to Western safety standards.

Commitments by the G-7 and the European Commission to provide technical assistance, and by the Ukrainian government to provide the necessary independence and resources to the regulator.

Approval by the board of the International Monetary Fund of extension of the IMF’s Extended Fund Facility to Ukraine.

Commitments by the other institutions expected to provide funds for the project.

Ukrainian nuclear power utility Energoatom, which will receive the loan, is required to ensure “enhancement” of safety levels at the two new units and at Energoatom’s 13 operating nuclear units. The EBRD also requires implementation of electricity sector reforms – particularly privatisation – of distribution companies – and increases in tariffs and tariff collections.

The board, representing the bank’s 61 shareholders, voted 63.7% in favour of the project and 7.8% against, while 28.5% abstained.

The total amount of EBRD grants for the closure of Chernobyl exceeds a billion euros, EBRD vice-president Joachim Jahncke told the international parliamentary hearing on Chernobyl’s closure on 5 December. Jahncke added that the bank had been concerned about whether Ukraine and its electricity sector “could afford the necessary credit”. But, he said, the present government “has finally done a serious job to restructure the sector in 2000 and improve cash payments [on the energy market]”. He stressed, however, that the EBRD’s financial conditions include renewal of the IMF Extended Fund Facility programme.