THE WORLD BANK: A NUCLEAR POWER LENDER

Introduction

The World Bank claims to not provide loans for nuclear power projects anywhere in the world. However, its lending policies often have tended to provide funding that allow governments and electric utilities to divert funds—that otherwise would be used for less-polluting projects—to controversial nuclear power plants, especially in Eastern Europe. While no one questions the importance of loans to build up the infrastructure in nations historically neglected or inaccessible by the West, such loans must not be used as a means of allowing utilities—often still state-owned and operated—to continue unnecessary, unsafe, and highly controversial nuclear power projects. Either the World Bank does not understand the implications of its loans, or it is deliberately breaking its stated policy of not providing funding for atomic power. In either case, substantial reform is necessary. Two case studies follow.

The Czech Republic

In July 1992, the World Bank signed a contract with CEZ (the Czech electric utility) for a loan titled "ENERGY I." The loan of $246 million was designed primarily to decrease the environmental impacts of electricity production in the Czech Republic, which at the time was based mostly on outdated lignite-fired power plants. The loan continues through 2007.

The modernization program of fossil fuel power plants, the objective of the loan, was officially completed in 1998 (CEZ spent $1.5 billion on this).

Since 1998, the largest part of the CEZ investment portfolio lies with nuclear projects: completing construction of the Temelin reactors, modernization of the Dukovany reactors, and construction of a temporary storage facility for spent nuclear fuel. Its official investment plan for the years 1999-2006 lists a budget of 77.6 billion CZK ($2 billion). From this, 53.4 billion CZK (69 %) is to be spent on nuclear development projects. The World Bank likes to claim that it does not give loans for nuclear projects. However, the World Bank’s continued loan disbursements enable CEZ to divert its own funds for massive nuclear investments. In other words, finances from the World Bank de facto allow the utility to continue with its nuclear development.

Moreover, CEZ is violating conditions of its loan from the World Bank. In 1999, CEZ was unable to meet acceptable levels for two out of the four criteria (the corporate working ratio and debt service ratio) laid out in the loan. According to its official business plan, the utility will fail to achieve levels of these corporate financial indicators that are acceptable to the World Bank in each of the coming years until 2003–and even this outlook is based on extremely optimistic assumptions.

Bulgaria

The World Bank also has been active in propping up the electric utility sector in Bulgaria, with the effect of allowing the Bulgarian utility (NEC, or National Electricity Company) to continue operations of its 6-unit Kozloduy reactors—often called among the most dangerous nuclear reactors in the world. Four of the six aging units do not even have containment structures, and are not designed to withstand a basic loss-of-coolant accident.

The World Bank provided a $93 million loan to NEC for completion of the Chaira Pump Storage Plant and the Iadenica Dam. The facilities are related, and are essential for the continued operation of Kozloduy and to provide sufficient waterflow to be able to construct a new nuclear facility.

Funding for new energy efficiency projects was to be part of this loan; those projects have not materialized. Despite pressure from the European Union to close four of the six Kozloduy reactors as soon as possible, the World Bank and International Monetary Fund have approved the government’s strategy of delaying closing of these dangerous reactors.

Conclusion

Based on these facts, the World Bank should engage in prompt action to either cancel these loans or to at least develop pressure on Czech and Bulgarian politicians and utilities, demanding radical changes in their business and investment policies.