Parliamentary report on first instalment of EU contribution to EBRD for Chernobyl Shelter Fund (link)

November 3, 2006

Brussels, 2 November 2006

FINAL A6-0374/2006
24.10.2006 Type of Procedure: Consultation procedure
REPORT on the proposal for a Council decision on the First Instalment of the Third Community Contribution to the European Bank for Reconstruction and Development for the Chernobyl Shelter Fund
Full text

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EXPLANATORY STATEMENT

1. Main elements of the Commission proposal

At the G7 Denver Summit in June 1997, the G7 Heads of State and Government and the President of the European Commission endorsed the setting up of a multilateral funding mechanism to assist Ukraine in implementing the Shelter Implementation Plan (SIP). They agreed on a G7 financial contribution which should be complemented by other donors. It was also agreed that the European Bank for Reconstruction and Development (EBRD) should be asked to establish and manage a dedicated fund - the Chernobyl Shelter Fund (CSF). The CSF was officially set up by the EBRD Board on 6 November 1997.

The first pledge to the Chernobyl Shelter Fund made by the European Commission in 1997 (US$ 100 million) was formally followed up by the "Council Decision 98/381/EC of 5 June 1998 concerning the Community contribution to the European Bank for Reconstruction and Development for the Chernobyl Shelter Fund". This contribution was effectively funded from the 1998 and 1999 Community budgets. The second Commission contribution (€100 million) was formalized by the Council Decision 2001/824/EC .

The Shelter Implementation Plan includes the following major technical steps to be implemented over the period up to 2010/2011:
- The stabilisation of the present shelter to the extent required for the subsequent steps;
- shielding for radiation protection purposes;
- increase nuclear safety to eliminate risk of criticality through water management;
- building of a new confinement;
- removal of upper unstable parts of present shelter;
- analysis of Fuel Containing Masses (FCM) and elaboration of FCM removal strategy.

The total cost of the operation is estimated to be $1,091 million USD including licensing work.

As of 31 October 2005, the financial situation of the Chernobyl Shelter Fund was as follows:
- total contributions to the CSF amount to some €658.6 million including Ukraine's in-kind contributions of $50 million;
- grant agreements concluded between the donors and the EBRD amounted to about €446.5 million;
- amounts contracted represented € 323.4 million;
- disbursements amounted to € 248.5 million.

In order that the Chernobyl projects might continue and brought to a successful completion, the major donors pledged some €173 million at an event in London in May 2005. This figure includes €49.1 million pledged by the Commission (corresponding to the historical burden sharing amongst the ex G7 members plus the EC), subject to the required authorizations. The Commission's pledge is intended to be paid over the period 2006-2009.

The objective of the present proposal is to solicit a Council decision for the first instalment of the third Community contribution amounting to €14.4 million. The proposed new contribution will be subjected to the same conditions stated in Articles 1 and 3 of Council Decision 98/381/EC of 5 June 1998, as applicable. The balance of the pledge (€34.7 million), to be paid over the period 2007-2009, will be subjected to a new decision..

The contribution will be made according to Article II, Section 2.02 of the Rules of the Fund and will be the subject of a formal Contribution Agreement between the European Commission and the European Bank for Reconstruction and Development.

Contributions in this context it should also be noted that a separate financial instrument for nuclear safety in third countries is currently being considered by the European Parliament and the Council. It is likely to be adopted before the end of 2006 and should be included clearly in the budget 2007. Contributions to the Chernobyl Shelter Fund will be included in this new instrument.

Amendments proposed by the rapporteur

The rapporteur proposes 2 amendments to the Commission proposal:

1) In the budget 2006 the appropriations for the Community contribution to the European Bank for Reconstruction and Development for the Chernobyl Shelter Fund (line 19 06 06) were put in the reserve (line 31 02 41 02 differentiated appropriations - compulsory expenditure): € 4,4 million in commitment appropriations and € 10 million in payment appropriations. The reason for this was that by the time the budget 2006 was adopted the present new Council decision was not adopted yet.

However, the objective of the present Council decision is to provide the legal basis for the first instalment of the third Community contribution amounting to € 14.4 (commitment appropriations). According to the Commission, the difference will be covered through a transfer from the TACIS-program towards line 19 06 06.

According to Art. 23 letter a of the Financial Regulation such a transfer within the same chapter could be executed by the Commission on its own. However, as long as it is not entirely sure what kind of transfer this will exactly be, the European Parliament wants to reserve its right to agree on the future transfer decision.

2) The second amendment aims at making sure that the European Parliament, as one branch of the budgetary authority, is kept informed of all operations of the Chernobyl Shelter Fund that are financed by the European Community.

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Committee on Budgets - Rapporteur: Janusz Lewandowski

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