Ukrainian President Volodymyr Zelensky on 22 September issued a decree "On urgent measures to stabilise the situation in the energy sector and further development of nuclear energy", which was published on the President's official website, and which came into immediate effect.
The decree (406/2020) instructs the Cabinet of Ministers to take comprehensive measures to pay off the debt for electricity produced and supplied within the framework of the special obligations put in place to safeguard national interests. In addition, the government is instructed to do everything possible to prevent further debt accruing to power generating companies, including nuclear utility Energoatom.
“In order to ensure the sustainable functioning of nuclear energy, overcoming the crisis with the calculations for the released electricity, as well as the further development of nuclear energy in Ukraine” the President decreed:
- to submit bills to the Verkhovna Rada (parliament) for consideration within two months in accordance with established procedure:
- on the location, design and construction of units 3&4 of the Khmelnitsky nuclear power plant;
- on amendments to some laws of Ukraine to improve the mechanism of using the financial reserve for the decommissioning of nuclear units, in accordance with the Law "On streamlining issues related to nuclear safety";
- to develop a long-term programme for the development of Ukraine's nuclear energy within the framework of the implementation of the Energy Strategy of Ukraine for the period up to 2035 based on "Security, energy efficiency, competitiveness";
- to ensure the improvement of the management of Energoatom, in particular to accelerate its preparation and corporatisation and immediately address the transfer of management functions to the Cabinet of Ministers [Energoatom is currently responsible to the Energy Ministry];
- to take comprehensive measures aimed at repaying debts incurred to electricity producers of the public sector of the economy as a result of their performance of special duties of electricity market participants to ensure public interests in the functioning of the electricity market, and ensure the prevention of such debts in the future.
Completing Khmelnitsky 3&4
In August, Energoatom resumed work on the construction of Khmelnitsky &4 and promised to approve a plan for completing the the units by the end of 2020 for operation in 2026.
Construction of the units began in 1985-1986, but work was suspended in 1990 due to a moratorium on the construction of new nuclear power plants.
Currently, Khmelnitsky 3 is 75% complete and Khmelnitsky 4 15% complete. They are both Russian-design VVER-1000 units (as are units 1&2). The total cost of completing the units in current prices is estimated at UAH 76.8 billion ($2.8 billion).
There are plans to produce up to 70% of the equipment for the station in Ukraine. Negotiations are also underway with Korean, Chinese and Eastern European companies, in particular Czech company Skoda JS.
Khmelnitsky 1 was connected to the grid in 1987, and unit 2 in 2004. Plans for the construction of two more units were first announced in 2010 during negotiations between Russian and Ukraine.
Energoatom operates 15 nuclear reactors and produces about 50% of Ukraine's electricity. Earlier in 2020, due to the restrictions imposed by the state on the production of electricity, the capacity of Ukrainian nuclear fleet fell several times to historical lows.
Earlier it was reported that Energoatom’s total debts had reached almost UAH 20 billion, which meant it was unable to pay contractors.
Energoatom has been in talks with the government for several months on amendments to regulation that impose special duties on electricity market participants. The Public Service Obligation (PSO) obliges state companies to limit the price of power sold directly to the population. Energoatom specialists and representatives of the Ministry of Energy had been working on a new pricing formula since May which would allow the company to sell more electricity on the free market. Ukraine’s electricity market, which was set up in July 2019, tied Energoatom to selling 85% of its electricity at a fixed low price within the PSO mechanism.
Energoatom also underwent major restructuring in May. This followed a series of staff changes since November 2019, when the cabinet dismissed Yury Nedashkovsky as President citing "ineffective management" and suspicions of corruption.
Parliament also re-established the independence of the State Nuclear Regulatory Inspectorate, which had been effectively placed under the control of Energoatom in 2016, stalling sources financial assistance. The Inspectorate’s independence was a condition of several agreements with the EU regarding the provision of a loans for safety programmes.