CNP Media Release

Media Release
Sierra Club of Canada
For release Thursday, November 21, 2002

Ottawa — Canadian and European environmental groups are calling for the plug to be pulled on financing for the Cernavoda-2 CANDU reactor in Romania. A report released today by environmentalists (see below) criticizes a lack of documentation and a failure to adequately address radioactive waste disposal, nuclear accidents, or earthquake risk. It is thought that the Canadian government's export loan agency, known as Export Development Canada (EDC) will provide a loan of $426 million ($269 million US) towards the $650 million cost of completing Cernavoda-2, a partially built 700 megawatt CANDU reactor, located on the Danube River near the Black Sea.

"Concealment of the environmental assessments would not be allowed if this reactor was being built in Canada" said Fraser Reilly-King, Coordinator of the EDC Working Group. "Public money should not be invested in this reactor without public accountability."

Full environmental studies on the project commissioned by AECL and the Romanian nuclear company Societatea Nationala Nuclearelectrica (SNN) have been kept secret with only summaries being released. Public interest groups have demanded full disclosure before financing proceeds. The US Export-Import Bank has indicated interest in backing Cernavoda-2, but ironically (unlike EDC) it is required to make public the full environmental assessment documents. The Ex-Im Bank therefore intends to present a memorandum on Cernavoda 2 to the US Congress for approval in the near future.

Dave Martin, Nuclear Policy Advisor for the Sierra Club of Canada stated, "After fifty years of financial failure, AECL's reactor exports should be allowed to sink or swim without government financing."

"Romania's Cernavoda-2 reactor is a huge financial risk for Canadian taxpayers. There should be no Canadian government loan without a full, up-front sovereign guarantee from the Romanian government – especially when the full risks have not been made public."

Romania's state nuclear company, Societatea Nationala Nuclearelectrica (SNN), is seeking about $650 million (US) financing for Cernavoda-2 from a variety of sources. The lynch-pin of the financing is an estimated $426.3 million (CDN) loan ($269 million US) from Export Development Canada. In addition a $223.8 million (US) (Euro223 million) is expected from the Euratom loan facility of the European Commission; $118.4 million (Euro118 million) from SACE, Italy's export credit agency; $24 million (US) from COFACE, the export credit agency of France; and $25 million(US) from the US Export Import Bank. Romania is expected to provide only about $200 million (US) from its own resources.

Financing for Cernavoda-2 has been held up since August, when the International Monetary Fund (IMF) advised the Romanian government to limit its sovereign loan guarantees, which count as liabilities on the government accounts. On the advice of the IMF, Romania has reportedly only agreed to provide a sovereign guarantee for $115 million (US) of all Cernavoda-2 loans in 2002, with the balance of the guarantee coming in 2003.

In Canada, the $426 million loan is on the "Canada Account" of the EDC, made directly from the government's main operating account, the Consolidated Revenue Fund, because it is too risky for private sector financial institutions or normal EDC transactions. In March 1999, 164 members of the Canadian parliament — a majority of MPs including one-third of the governing Liberal party – came out publicly against federal government financial support for Cernavoda-2. In 1995, AECL promised to sell "ten reactors in ten years". Only two reactors have been sold to China in 1996.

The Cernavoda-2 project is a consortium between Atomic Energy of Canada Limited (AECL), and the Italian state-owned nuclear company Ansaldo. AECL is a federal crown corporation that designs and markets CANDU reactors. Construction on Cernavoda-2 started in 1980 along with the first reactor which began operation in 1996. Work on the second reactor ground to a halt for financial reasons following the revolt against communist dictator Nicolae Ceaucescu in 1989. Cernavoda-2 was only 20 to 40% complete at the time.