Prepared by Martin Kelly
Edited by Tamara Robinson
August 1997

Introduction
Nuclear energy currently accounts for 44-45% of Ukraine's total power production.[1, 2] In 1995 and 1996, Chornobyl Units 1 and 3 comprised 5-6% of annual, national electricity production.[3] Although Unit 1 shut down on 30 November 1996, these statistics imply that the nuclear industry in Ukraine, specifically the Chornobyl Nuclear Power Plant (ChNPP), plays a crucial role in Ukraine's energy production. However, current fuel and energy issues at ChNPP, in particular Ukraine's reliance on Russia for nuclear fuel, Ukrainian consumer debt to ChNPP, the Chornobyl shutdown debate, and President Kuchma's decision to take Chornobyl-1 off line, reveal the complexity of problems surrounding the Chornobyl facility and the shortcomings of Ukraine's energy sector.

1991: Ukraine's Energy Woes Begin
Current fuel and energy difficulties at Chornobyl, and in Ukraine in general, derive from Soviet-era economic planning. Before the collapse of the USSR in 1991, Ukraine imported from Russia 10% of the coal, 50% of the gas, 92% of the oil, and 100% of the nuclear fuel that it consumed.[4] Ukraine's nuclear sector still depends completely on Russia for nuclear fuel and essential equipment, since its Soviet-type RBMK and VVER reactors only operate on Russian-made fuel assemblies. Ukraine has no indigenous nuclear fuel cycle capabilities.[5] When the USSR collapsed in 1991, it became clear that the history of dependence on Moscow for energy commodities had created severe problems for Ukraine's energy sector, suddenly faced with restructuring, privatization, consumer debt, market liberalization, and innumerable power outages.

Also in 1991, Ukraine's nuclear power industry suffered from a serious turbo-generator fire at Chornobyl-2, which disabled the unit and prevented its further operation. Together with the infamous disaster at Chornobyl-4 in 1986, the incident sparked high-level international debate about the safety of RBMK reactors and led the Verkhovna Rada to issue a moratorium on the construction of new nuclear power plants in Ukraine. The Verkhovna Rada (Ukraine's parliament) even passed legislation calling for the closure of ChNPP by the end of 1993.[6] In 1993, the Rada repealed the moratorium and decided to keep Chornobyl open in order to confront projected power shortages in the winter of that year.[7, 8, 9] Nevertheless, the fire at Chornobyl-2 focused international attention on Ukraine's nuclear power sector, particularly the Chornobyl NPP.

Fuel Shortages and Consumer Debt at Chornobyl
Ukraine's nuclear fuel shortages began making headlines in 1994 and exacerbated the energy sector's difficulties. Since then, a drama has played out between Kiev and Moscow, with Ukraine periodically announcing it needs fuel and Russia reluctantly providing it, since Ukraine has no other place to turn to for its nuclear fuel needs. Accordingly, two key themes of this drama have revolved around debt, including consumer debt to Ukraine's power sector and, in turn, the Ukrainian power sector's growing indebtedness to Russian fuel manufacturers. ChNPP is especially indebted to the Russian nuclear fuel delivery company TVEL.

On 14 January 1994, the United States, Ukraine, and Russia signed the Trilateral Statement, part of which included a deal to exchange nuclear fuel for the return of nuclear warheads from Kiev to Moscow. The Trilateral Statement stipulated that Russia would deliver 430 fuel assemblies to Ukraine in 1994. But, by October 1994, Ukraine had reportedly depleted its stock of nuclear fuel at Chornobyl and only received 180 fuel assemblies from Russia. In addition, the plant lacked funds to compensate Russian producers for shipments of nuclear fuel, an ongoing problem.[10]

In the first half of 1995, Chornobyl-1 and Chornobyl-3 operated well, fulfilling 104% of the planned quota and reducing unscheduled repairs and errors at the plant by 31%, according to then Chairman of Derzhkomatom Mikhailo Umanets.[11, 12] Fuel problems stabilized somewhat until early 1996, largely because the two operable units spent a number of months off line in the latter half of the year. For nearly four months, from 15 April to 6 August 1995, Unit 3 was off line for repairs.[13] In August 1995, Unit 1 was reduced to 70-80% of its capacity for safety reasons.[14] Then, beginning in September 1995, Unit 1 was off line for maintenance, including the replacement of 39 out of 1692 fuel channels[15, 16]. After an unscheduled two-week delay, the reactor returned to operation on 6 November 1995.[17, 18] Given such stoppages and reduced operating capacity, fuel shortages at Chornobyl during this period did not worsen terribly. Yet, during first half of 1995, ChNPP received only 57% of consumer payments.[11, 12]

In January 1996, consumer debt increased further, and Ukraine received payment for only 13% of its energy production. Derzhkomatom could not afford to buy the reported $100 million of fuel needed to keep various reactors on line and was threatened with taking Chornobyl-3 off line.[19] Ukrainian operators fortunately received 160 fuel assemblies from Russia on 3 April 1996 -- shortly before the Nuclear Safety Summit held two weeks later in Moscow -- thereby averting Unit 3 closure for a few more months.[20] Operators also concluded on 23 May 1996 an amendment to the 1994 Trilateral Statement, in which Russia agreed to continue fuel rod deliveries, especially to the ChNPP.[21] Adding to Ukraine's energy woes, however, Chornobyl-1 was shut down in June 1996 as much for a lack of fuel as for scheduled maintenance, according to Derzhkomatom experts.[22] Russia once again delivered a badly needed shipment of fuel on 24 June 1996.[23]

In March 1997, faced with another fuel shortage, Chornobyl operators were forced to reduce Unit 3, the only operating reactor at Chornobyl, to half capacity. Chornobyl-1 closed on 30 November 1996, in accordance with a pledge by President Kuchma. (See the section below entitled "Chornobyl-1 Goes Off Line.") Without new fuel, Chornobyl operators were once again threatened with the prospect of Unit 3 shutdown in two to three months. ChNPP owed Russia's joint stock company TVEL $3.5 million for previous shipments of nuclear fuel, while the consumer debt to the Chornobyl operators had risen to approximately $108 million.[24, 25] Plant operators were considering the use of 600 partially spent fuel assemblies still in the damaged Unit 2 reactor [26], when Russia's TVEL agreed once again to make a delivery of new fuel, enough to last for 2-3 additional months, through summer 1997.[27, 28]

Ukrainian Minister of Power Engineering and Electrification Yuriy Bochkaryov stated before the Verkhovna Rada in February 1997 that Ukraine's power sector had "exhausted its capacity in supplying electricity to consumers on credit and is facing bankruptcy." Bochkaryov added that the power sector had lost its working capital, since in reality, consumers pay for only two out of three kWh.[29] Further, in April 1997, Derzhkomatom Deputy Chairman Vasyl Katko said that Ukraine could afford only 30% of annual repairs to its NPPs in summer 1997 because of consumer debt.[30] While nuclear fuel shortages and consumer debt to the Ukrainian power sector reveal the depth of problems related to Ukraine's energy sector, consumer debt also worsens the inability to purchase fuel and, ultimately, creates safety problems.

Replacement Energy and the Chornobyl Shutdown Debate
Beginning in July 1994, the Group of Seven (G-7) spearheaded a movement aimed at shutting down ChNPP. Thus, in the period from mid-1994 through 1995, Ukrainian and Western experts proposed a myriad of options for replacing Ukraine's anticipated energy loss in light of efforts to close Chornobyl. The first energy replacement options considered included building a gas-fired power plant [31, 32], modernizing coal and oil plants, [33] or constructing two new nuclear reactors in the town of Slavutych, located very near Chornobyl. Ultimately, in December 1995, Ukraine and the G-7 signed a Memorandum of Understanding (MoU) which provided for closing ChNPP in exchange for Western funding for the completion of Khmelnytskyy-2 and Rivne-4. (For more information see Background Report: Chornobyl Shutdown, Western Aid.) The MoU shortens the lifetime of reactors at ChNPP, originally projected through 2011, permitting operation until the year 2000. As it turned out, Chornobyl-1 and Chornobyl-3 produced 6% of Ukraine's total electric energy in 1995 while generating at half capacity, according to the Verkhovna Rada press service;[34] another source reported the units working at 69% generating capacity.[35] Yet, even while generating below full capacity, the reactors at ChNPP contributed a significant amount of energy to Ukraine's output. The debate surrounding shutdown demonstrates Ukraine's reliance on ChNPP as an important part of its energy production; hence, Chornobyl shutdown is inextricably linked to the energy problems in Ukraine.

Chornobyl-1 Goes Off Line
Faced with pressure from the West to close the plant as well as nuclear fuel shortages at Chornobyl, Ukrainian President Leonid Kuchma pledged at the April 1996 Nuclear Safety Summit in Moscow to take Chornobyl-1 off line by November 1996.[36] Kuchma presented the move as a good will measure, indicating to a Western audience his country's serious commitment to closing ChNPP only if Western funds were forthcoming. However, given that the unit was scheduled to shut down soon anyway, the timing of Kuchma's statement led many observers to wonder whether his promise was purely political.[37] The safe life of Unit 1 ended in 1997, at which time the fuel channels needed replacing. Since no funds for modernization were available, Kuchma closed the unit [37, 38], and Ukraine lost a reported 4.8 billion kW/h per year as well as 1600 jobs in the Slavutych region.[38]

Kiev has reserved the option of restarting Unit 1 and has considered refurbishing Unit 2 for continued service. Restart of Unit 1 is prohibitively expensive, estimated at $225-$450 million, nearly the cost for completing Rivne-4 or Khmelnytskyy-2 at the highest estimation.[38] Bringing Unit 2 on line presents a more likely alternative for power generation with estimates for restart ranging from $85 to $280 million.[38, 39, 40] Unit 2 refurbishment funds would likely be allocated for safety backfits, replacement of isolation valves on the inlets to the fuel channels below the reactor, and borrowing turbines and fuel from Unit 1.[41] The latest reports, however, have expressed some pessimism about Unit 2 restart, placing the earliest possible on-line date in the second quarter of 1998.[39] Taking Unit 1 off line, but reserving the right to restart Unit 2, suggests that Ukraine cannot function without the power from Chornobyl or from a comparable replacement source. This fact complicates the shutdown debate and seems to worsen the dilemmas in the energy sector.

Conclusion
To date, Ukraine has no clearly articulated plan for fueling Chornobyl-3 until 2000, the year when the reactor will go off line in accordance with the December 1995 MoU. In light of current financial difficulties in fueling the unit, the need for Ukraine to work out a deal with the G-7 to finance the completion of Khmelnytskyy-2 and Rivne-4 seems more pressing. Yet if the current level of consumer debt in the electricity sector continues, the value of obtaining new reactors is seriously questionable. Without a comprehensive re-evaluation of its electricity market and energy sector, unresolved issues at Chornobyl will continue to plague Ukraine's energy sector.
Sources:
[1] "Power Engineering Is the Barometer of Our State's Stability and Development," Uryadovyy Kuryer, 13 March 1997, p. 5; in "Ukraine: Power, Electrification Minister Interviewed," FBIS-SOV-97-058, 13 March 1997.
[2] UNIAR, 25 January 1997; in "Ukraine: Nuclear Power Stations Exceed 1996 Production Target," FBIS-SOV-97-017, 25 January 1997.
[3] Judith Perera, The Nuclear Industry in the Former Soviet Union: Transition from Crisis to Opportunity, Vol. 1 (London: Financial Times Energy Publishing, 1997), pp. 70-74.
[4] Raisa Stetsyura, ITAR-TASS, 14 March 1997; in "Ukraine: Parliament Says Country's Fuel Situation 'Catastrophic,'" FBIS-SOV-97-053, 14 March 1997.
[5] Mikhail Melnik, ITAR-TASS, 8 April 1997; in "Ukraine: Minister Says Ukraine Nuclear Safety 'Unsatisfactory,'" FBIS-SOV-97-098, 8 April 1997.
[6] "Parliament Chairman Denies Decision To Stop Chornobyl NPP," Upresa Daily Report, 30 November 1995.
[7] "Chernobyl To Continue Operating," Surviving Together, Winter 1993, p. 51.
[8] Ron Popeski, "Ukraine Votes To Keep Chernobyl Open," Reuter, 21 October 1993.
[9] Ann MacLachlan, "Ukrainian Regulator Resigns To Protest Chernobyl Decision," Nucleonics Week, 9 December 1993, pp. 11-12.
[10] "Financial Crunch Puts Ukraine On Verge Of Running Out Of Fuel," Nuclear Fuel, 10 October 1994, pp. 18-19.
[11] Serhiy Sokolovskiy, "Nuclear Chief On Chornobyl Reactors," Intelnews, 13 August 1995.
[12] "Continued Operation Of Chornobyl NPP Recommended," UNIAN, 28 July 1995.
[13] "Chornobyl plant working at full capacity," Ukrainian Weekly, 13 August 1995, pp. 2, 4.
[14] "Interview With Serhiy Parashyn, Director Of The Chornobyl Nuclear Power Plant," Intelnews, 28 August 1995.
[15] UNIAN, 3 October 1995; in "Chornobyl," FBIS-SOV, 3 October 1995.
[16] "Ukraine, G-7 In Talks To Close Chernobyl," Reuter, 11 October 1995.
[17] BBC Monitoring Service, 23 October 1995.
[18] IAEA Daily Press Review, 6 November 1995, No. 285.
[19] "U Ukrainskikh AES ne khvatayet sredstv ha zakupku topliva," Izvestiya-Finansoviye Izvestiya, 25 January 1996, p. 1.
[20] "Nesmotrya ha zadolzhennost Chernobylskoy AES za postavlyaemoe toplivo, Rossiya prodolzhayet ego otgruzku," Rossiyskaya Gazeta, 3 April 1996, p. 1.
[21] Alex Brall, "Chernobyl-1 Threatened With Lack Of Fuel, November Closure," Nucleonics Week, 13 June 1996, pp. 15-16.
[22] "1 energoblok Chernobylskoy AES ostanovlen ha plannovyy remont," Interfax, 24 June 1996.
[23] "Russia Ships New Fuel To Chernobyl Plant," Nuclear News, August 1996, p. 72.
[24] Interfax, 13 March 1997; in "Fuel Shortage To Cause Shut Down Of Chernobyl Power Unit," FBIS-SOV-97-072, 13 March 1997.
[25] ITAR-TASS, 13 March 1997; in "Fuel Shortage Halve Chernobyl Reactor Capacity," FBIS-SOV-97-072, 13 March 1997.
[26] UNIAN, 20 March 1997; in "Chernobyl To Utilize Nuclear Fuel From Ruined Generator," FBIS-SOV-97-079, 20 March 1997.
[27] ITAR-TASS, 24 March 1997; in "Moscow To Supply Fuel For Chernobyl 'in 7-10 Days'," FBIS-SOV-97-083, 24 March 1997.
[28] ITAR-TASS, 25 March 1997; in "Russia: Firm Ships Fuel To Chernobyl Nuclear Plant Despite Debt," FBIS-SOV-97-084, 25 March 1997.
[29] UNIAN, 12 February 1997; in "Ukraine: Power Engineering System Faces Bankruptcy," FBIS-S0V-97-030, 12 February 1997.
[30] "Ukrainian Nuclear Update," RFE/RL Newsline, Vol. 1, No. 7, Part II, 9 April 1997.
[31] Peter Coryn and Ann MacLachlan, "Ukrainian Have Mixed Reactions To Chernobyl Gas Proposal," Nucleonics Week, 15 June 1995, pp. 10, 21.
[32] "Ukrainian Government Negotiating Chernobyl's Future With A Divided Team," Post-Soviet Nuclear & Defense Monitor, 12 June 1995, p. 11.
[33] Yuriy Orobets, Henndiy Schastliviy, and Oleksandr Dupak, "What Will We Have Instead of Chornobyl?" 5 September 1995, p. 6.
[34] "Zabezpechyty natsionalni interesy Ukrainy," Holos Ukrainy, 6 January 1996, p. 4.
[35] UNIAN, 4 November 1995; in "Ukraine: Chornobyl Nuclear Power Plant Best in Ukraine, Performance Shows," BBC Monitoring Service, 17 November 1995.
[36] "Chernobyl Reactor No. 1 To Close This Year," Reuter, 22 April 1996.
[37] Izvestiya Ukraina, 30 November 1996, p. 1; in "Ukraine: 'All Rules Broken' In Shutdown Of Chernobyl No. 1 Unit," FBIS-TEN-96-011, 30 November 1996.
[38] Peter Coryn, "Chernobyl-1 Is Shut But Ukraine Keeps Units 1,2 Restart Option," Nucleonics Week, 2 January 1997, p. 14.
[39] UNIAN, 26 March 1997; in "Ukraine: Second Reactor At Chernobyl May Not Be Reconnected," FBIS-SOV-97-085, 26 March 1997.
[40] Ann MacLachlan, "Chernobyl Managers Want To Reopen Unit 2 To Offset Unit 1 Shutdown," Nucleonics Week, 21 November 1996, p. 16.
[41] "Chernobyl-1 Shut Down, Unit 2 May Restart In 1997," Nuclear News, January 1997, pp. 33-34.

	Updated June 2005