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Policy Department D: Budgetary Affairs ____________________________________________________________________________________________ ANNEX 8 - ANSWERS PROVIDED BY EBRD EBRD Response of 30 July 2013 to Öko-Institute Questions of 18 June 2013 Introduction The questions asked by Öko-Institute focus on details of the management of three International Decommissioning Support Funds administrated by the European Bank for Reconstruction and Development. It was felt that replies to these questions can only be provided by describing the framework for the Bank’s activities in the nuclear safety area. Without this context, answers to the questions would be isolated and insufficient to provide an understanding of the entire process. The Bank has therefore chosen to provide information covering all questions in seven themes: The Bank and Nuclear Safety Fund Governance The Bank as Fund Manager Relations between EC and EBRD EBRD’s approach to program management Project Implementation Court of Auditors report The Bank and Nuclear Safety The EBRD was founded in 1991 with a mandate to assist countries of Eastern Europe and the former Soviet Union in their transition to democracy and market economy. It has been involved in international assistance in the area of nuclear safety from its inception as many of its countries of operation inherited a burdensome nuclear legacy from Soviet times. In the context of the G7 Action Plan to improve nuclear safety in the countries of the Soviet bloc, presented at the 1992 summit in Munich, the Bank was asked to establish an efficient delivery mechanism for large nuclear safety assistance programs. The first Fund, established in response to this appeal, is the Nuclear Safety Account (NSA), which started operation in 1993. The NSA has funded nuclear safety projects in Lithuania, Bulgaria, Russia and Ukraine. Currently it finances projects required for the decommissioning of Chernobyl NPP Units 1-3. Modeled on the NSA, and again at the request of the International Community led by the G7, the Bank set up a second Fund – the Chernobyl Shelter Fund - in 1997 to fund a program to bring Chernobyl NPP Unit 4 into a safe state. A very similar approach was taken to funding the assistance programs that are the topic of this questionnaire: the International Decommissioning Support Funds for Bohunice (BIDSF), Ignalina (IIDSF) and Kozloduy (KIDSF). Recognizing the economic burden on the three accession countries posed by the decision to close their first generation Soviet-designed nuclear power plants (NPPs) ahead of the expiry of their intended lifetime, the EC requested the Bank to set up three Funds to finance projects related to the decommissioning of these units as well as to measures in the energy sector for assisting in overcoming the consequences of the loss of generating capacity. The purpose of these Funds was never to cover all costs associated with the decommissioning of the plants to be closed, as these NPPs would have to be decommissioned at some point in time anyway. 192
Nuclear Decommissioning: Management of Costs and Risks ____________________________________________________________________________________________ The Funds support decommissioning in recognition of the burden of early closure. They became operational in 2001. In addition, the Bank manages a Fund – the Northern Dimension Environmental Partnership (NDEP) Nuclear Window - which deals with the legacy issues stemming from the operation of the Soviet Northern Fleet. One of the key priorities of international nuclear safety assistance has been to achieve the closure of reactors of Soviet design (RBMK reactors as well as VVER 440-230) where there has been a consensus that these are not upgradeable to acceptable safety levels. EBRD-managed Funds have contributed to achieving this aim in Chernobyl 1-3, Bohunice V1, Ignalina 1 and 2 and Kozloduy 1-4. The EBRD retains the necessary expertise to manage these specialized Funds as well as to advise on nuclear safety projects financed from the Bank’s ordinary capital in line with its Energy Policy. The Bank’s Nuclear Safety Department has 23 full-time employees. The majority of the 14 senior managers have a technical background and most have worked in the nuclear industry or nuclear regulatory agencies. Other functions in the team cover procurement, financial control and administration. Five staff work out of EBRD’s Resident Offices in Kiev and Moscow. The Nuclear Safety Department draws on all of those services of the Bank needed to fulfill its task, such as services from the Environment and Social Department, the Procurement Department, Energy Efficiency Department, Legal Department, and relevant finance departments. Fund Governance The three International Decommissioning Support Funds are multilateral Donor Funds. Donors contributing at least 1.5 million EUR become full members with representation in the Assembly of Contributors, which is the highest decision-making body in each of the Funds. IIDSF has 17 members, KIDSF has 12 members, and BIDSF has 10 members 24 . Bulgaria, Lithuania and the Slovak Republic are members without any obligation to make a cash contribution 25 to their respective Funds. The operation of the Funds is governed by Fund Rules which are approved by the Assembly and the EBRD’s Board of Directors. The Fund Rules set out roles and responsibilities, in particular: the purpose of the Fund; membership of the Assemblies; the duties of the Fund Manager and the privileges of the Assembly; and logistical arrangements (chairmanship, number of meetings etc). The Assembly of Contributors is the top decision-making body for each of the Funds. It takes decisions by consensus. It elects its chairman (as proposed by the largest donor) and approves strategic decisions as well as the regular financial reports and work programs produced by the Fund Manager. Its most important role is the approval of funding for individual projects or programs. Projects are presented to the Assembly at several stages, first for information and then for approval. Typically it is first presented early on after a candidate project has been identified in the decommissioning strategy, plan or a relevant study. When the development of a project has matured sufficiently to provide cost and schedule information, it is submitted in the form of a Project 24 Switzerland is a contributor to all three funds but has ceased its participation in the Assemblies 25 They are included in the number of members 193
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