The Fuel and Energy Ministry has given a new push to the forgotten idea to create a nuclear fuel production cycle in Ukraine. The ministry collegium has endorsed the preliminary steps to be taken over the next four years aimed at stepping up production of uranium for the atomic energy industry. “For us it is a matter of strategic importance, and we must catch up on our work,” said Minister Serhiy Yermilov, adding that next year more uranium will be needed, with two more units put into operation at the Rivne and Khmelnytsk nuclear power plants. According to him, Ukraine has the world’s richest uranium deposits. Therefore, it has every possibility to reduce its nuclear power plants’ dependence on imported fuel. Presently, Ukraine produces a mere 30% of the uranium fuel it needs. Notably, according to the Fuel and Energy Ministry, workable deposits of uranium ore discovered on Ukrainian territory could last up to a hundred years. The total investment needed for this project is estimated at $1 billion.
The government program to create a closed nuclear cycle in Ukraine was approved back in 1994, when the president set up a Nuclear Fuel Cycle Fund (NFCF), obligating the Enerhoatom state company to make disbursements to the fund. For five years afterward, Russia supplied free nuclear fuel to a Ukrainian nuclear power plant in return for Ukraine’s decision to destroy its nuclear arsenal. Receipts from sales of power produced using this fuel were to be spent on a new uranium production industry.
Meanwhile, the Vatutino, Michurinsk, Novokonstiantynivka, and Central deposits waited for investment. After nine years the ministry collegium concluded that the promises never translated into money. “Enerhoatom’s failure to honor its financial commitments to the NFCF is due to the subjective stand its management has taken on disbursements to the fund,” reads the decision of the Fuel and Energy Ministry collegium.
On July 11, Serhiy Tulub, president of the Enerhoatom state company, said he does not consider his company responsible for disrupting the project to create a nuclear cycle. “Problems built up over the years when electricity bills remained largely unpaid. But even at that time we did everything to continue disbursements to the fund,” said Mr. Tulub. In an effort to find a middle ground, Enerhoatom has proposed that the Fuel and Energy Ministry analyze the possibility of raising the rates for electricity generated by nuclear power plants. Enerhoatom pledges to transfer all additional receipts to the NFCF. Enerhoatom rates were last adjusted in 1999, when it was reduced from 2.7 cents per kWh to 1.2 cents per kWh, which, according to Mr. Tulub, made funding of the nuclear fuel cycle program even more complicated.
On July 14, Fuel and Energy Minister Serhiy Yermilov received the proposal to increase the tariff for electricity generated by nuclear power plants quite positively. According to preliminary estimates, this rate could be increased by UAH 0.176 per kWh. It is expected that the additional funds will be used to complete the starting complex at the Novokonstiantynivka deposit over the next four years. This will help increase production at the Eastern Ore Dressing Combine by 1.5 times. Additionally, the Fuel and Energy Ministry collegium raised the issue of granting the NFCF the status of a legal entity. This will enable the fund to formalize its relationship with the Enerhoatom state company.
The collegium also decided it would be advisable to create an Atomenerhoprom company that would combine in itself the nuclear fuel cycle that consists of uranium mining, production of nuclear zirconium, rolled zirconium, and components to be used in the production of nuclear fuel. Formerly, the ministry instructed Enerhoatom to consider merging the nuclear fuel cycle enterprises with the Enerhoatom state company. Most probably, Atomenerhoprom will become a subsidiary of Enerhoatom. Mr. Tulub has not yet issued an official response to the inquiry of the Fuel and Energy Ministry, but shared his opinion with journalists. “Why shift problems from an ailing head onto a healthy one? First we must solve the issue of the financial performance of enterprises, social issues, and only then discuss a merger,” he said. The situation in the enterprises of the nuclear fuel cycle is critical, with back wages for the six months of 2003 exceeding 4.3 million. As a result of the underfunding of the Zirconium enterprise, a bankruptcy suit has been filed against it.
Obviously, the ministry will not achieve much by ordering Enerhoatom to increase disbursements to the NFCF. Serhiy Tulub stated that upgrading obsolete power units at Ukrainian nuclear power plants currently tops the list of Enerhoatom’s priorities. Under such conditions, a slightly higher tariff for electricity generated by nuclear power plants seems the only compromise that will make breaking this deadlock possible.
