Director of the Nuclear Safety Department of the European Bank for Reconstruction and Development (EBRD) Vince Novak has confirmed in an interview with Interfax-Ukraine that the previously announced terms for the completion of the Shelter facility at Chornobyl Nuclear Power Plant – by the autumn of 2015 - remain in force. Q: How much money was allocated for the Chernobyl Shelter Fund and the Nuclear Safety Account? A: Last year, donors, along with the EBRD, allocated EUR 740 million for both programs. Of these, EUR 550 million was allocated by donor countries for the Chornobyl Shelter Fund and the Nuclear Safety Account. In addition to these funds, the EBRD Board of Governors approved the allocation of EUR 190 million to build a new safe confinement (NSC) and an interim storage facility (ISF-2). The allocated funds cover the assessed value in these areas. Q: What is the cost of the construction of the NSC (the Shelter facility over the destroyed nuclear reactor at Chornobyl Nuclear Power Plant) and the ISF-2? A: The construction of the NSC costs more than EUR 950 million. The contract for the supply and installation of equipment for the ISF-2, which was signed in February 2011, was worth EUR 255 million. Q: Is it planned to increase the cost of equipment and work on both projects, or these amounts could be considered final? A: There are risks of a rise in prices related to the risk of exchange rate fluctuations. To some extent, these risks are taken into account in the cost of a contract [with Holtec International] for the construction of the ISF-2. As for the NSC, the risks are laid on the general contractor represented by Novarka Concern, and since they bear these risks, then, accordingly, they should be interested to finish this project by the time fixed and within the fixed budget. Q: It was earlier stated that the construction of the Shelter facility at Chornobyl Nuclear Power Plant should be completed by the autumn of 2015? Do these terms remain in force? A: These terms are reflected in a supplementary agreement to the contract with Novarka, which was signed in September 2011, and as of today Novarka must complete the necessary work before the autumn of 2015. Q: Does the contract with Novarka envisage penalties for the failure to perform work within the stipulated period of time? A: Yes. Q: Is the EBRD satisfied with current relations with the Ukrainian government as part of the implementation of these projects? Are there any issues that have yet to be resolved? A: In fact, we have no problems in relations with the Ukrainian government. It should play and it plays an important role in ensuring the creation of the necessary conditions for the successful implementation of these projects. In projects of this kind, which are unique and were not implemented earlier, there will always inevitably be some moments that require rapid intervention and immediate actions. These things and moments always arise, and there are currently a number of issues that still need to be resolved. We are waiting for the participation of the Ukrainian government in addressing them so that these projects do not fall behind schedule and their value does not grow. Q: What issues that have not yet been finally resolved are currently being discussed? A: In particular, we now have a dialog on how to ensure a clear and effective procedure for the exemption from VAT of Ukrainian subcontractors on this project. This is a very important point, because the potential risk is very high if this issue is not resolved. The second point that is being discussed and solved is the use of new Ukrainian norms and standards to the project decisions that were drafted and prepared before their adoption. At the same time, it is important to protect the Chornobyl program and projects from the adverse effects of such changes and their impact on the value of projects. Some other issues may arise in six months. Therefore, it is very important that Ukraine and its government pay constant attention to solving these tasks. We have three years and over this period we have to build, in fact, the biggest sliding shield and it is important that over this period there should be certain stability not only with respect to rules and standards in terms of projects, but also in terms of the construction procedures. The introduction of permanent changes will cost extra money and, of course, will lead to delays in the implementation of the project. The Shelter facility will be a building in the form of an arch 105 meters high, 150 meters long and 260 meters wide. After construction, it will be placed over the fourth reactor at Chornobyl Nuclear Power Plant, over which there is currently a sarcophagus. Two funds were created for all work related to activities at Chornobyl Nuclear Power Plant: the Chornobyl Shelter Fund and the Nuclear Safety Account, of which the activities should be funded on the construction of the interim storage facility (ISF-2). Q: Will the EBRD control the transparency of procurement at tenders in order to avoid, say, overpricing during the acquisition of materials and equipment, and generally exercise control over the expenditure of funds? A: It is necessary to note several points here. First and foremost, last year the EBRD conducted an independent study by a third party regarding procurement procedures. At the same time, this initiative came from the top leadership of the EBRD, rather than from our Nuclear Safety Department, which I represent. As a result of this report, procurement by a project management team was rated as "very good," and it is one of the best reports. There’s close control over what is happening. And not only control over procurement and the expenditure of funds on a daily basis, but also control over the holding of work according to schedule and within the fixed budget. Although enough funds were allocated for the implementation of projects, gaps during their use are very small, so it is important to keep everything within budget and according to schedule. In addition, we have the possibility to use additional monitoring functions. Q: In addition to Chornobyl projects, the EBRD is also working with the Ukrainian nuclear energy generating company Energoatom. The bank is currently considering allocating significant credit resources to the state company to implement a program to improve safety at nuclear reactors in Ukraine. What is your assessment of the implementation of such a program? A: I cannot but remind you of the already implemented program to improve safety at the second nuclear reactor at Khmelnytsky NPP and the fourth nuclear reactor at Rivne NPP. I think that it was a great experience and well implemented program. It should be noted that measures to improve safety at nuclear reactors at other plants were mentioned in a loan agreement on Kh2/R4 as one of the covenants (a contractual obligation to perform certain actions), so this program, in our opinion, is a very logical extension of what has already been done. There’s currently close cooperation between the EBRD, the European Commission and Energoatom, pre-project studies are being conducted, various assessment and materials are being prepared, and the necessary permits are being received. We expect that the question of funding for this project will be submitted for consideration by the EBRD Board of Directors in the autumn of 2012.