1.  NAME OF PROJECT AREA: CHERNOBYL SHELTER PROJECT

Rationale

  Repair and replacement of the sarcophagus surrounding Unit 4 at Chernobyl—thus preventing a further serious release of radioactivity into the environment.

  Long term: Complete new Shelter by 2008.

Objectives

  Interim: Tenders for major construction elements of projects released by end 2001. Lead contractors selected mid 2002. Construction work on the new containment to begin by mid/end 2003.

Risks

  This will be a massive construction project requiring tight project management by EBRD contractors if cost and time over-runs are to be minimised. Potential for Ukrainian Govt to try and renegotiate agreed design and other issues that could (i) delay start date, (ii) increase scope of project beyond current specification. Management of radioactive waste from the site is one such issue.

  The CCR estimated some £20 million was required for this activity over the next 10 years. The budget for the Shelter project within the FSU Programme stands at £16.59 million total for the three years. The UK has pledged the money in two tranches. The first pledge totalled US$16.82 million. The majority of these funds were disbursed prior to April 2001. The balance of £3.84 million was paid to the EBRD on 18 July 2001. The second pledge is for £12.13 million and this is being paid in three annual tranches. The £3.84 million spent this year from the first pledge together with the £12.13 million committed for the second pledge, totals £15.97 million over the three year programme, Consequently there is a £0.65 million surplus in the allocation for this programme area at present.

  Project Status: This is a long running EBRD managed project to stabilise and replace the sarcophagus surrounding the damaged Unit 4 reactor at Chernobyl that exploded in 1986. The present position is that all the major design phases of the project are now complete—including critically the design of the new Shelter—and tendering for the construction works will begin this year. The project is not scheduled to complete until 2008.

2.  NAME OF PROJECT AREA: PLUTONIUM DISPOSITION IN RUSSIA

Rationale

  Reduce the threat posed by the proliferation of fissile nuclear material by converting weapons grade plutonium extracted from dismantled surplus nuclear weapons into a non weapons useable form.

Objectives

  Long term: Conversion of at least 34 tonnes of Russian weapons grade plutonium into a non-weapons usable form.

  Short term: Completion of further negotiations between donor governments and the Russian Federation to produce a politically acceptable, technically feasible and cost effective programme for the disposition of Russian surplus weapons grade plutonium.

Risks

  The considerable uncertainty on when the Programme might start impacts on the effective management of the FSU programme budget. Difficulties in the negotiations to achieve the short term objective may cause continued delay to the disposition programme. Insufficient international funding may put further pressure on the UK to increase its pledged contribution of £70 million.

  Note: there is still considerable uncertainty about the future spend profile of work on plutonium disposition. The forecasts carry a very strong health warning!

  Project Status: The UK has announced a contribution of £70 million over the next 10 years. Up to £20 million of this will come from the new interdepartmental programme over the next three years, although the precise level of our contribution is probably fairly flexible. The US has now completed its review of its non-proliferation programmes and reaffirmed its commitment to the plutonium disposition programme whilst indicating that search for a more cost effective solution must continue. The G8 Experts Group (PDPG) will recommence its meetings on 16 April 2002 with a view to progressing the main project for the Russian disposition programme. In parallel, the US and Russian costings' groups have expanded their work to include an evaluation of the cost and effectiveness of hitherto unexplored disposition scenarios. This work forms a part of the Experts' ongoing attempts to identify the most cost effective disposition scenario. The UK has, throughout this period, continued its close dialogue with US colleagues in an attempt to identify projects which the UK might usefully fund as a necessary contribution to whichever disposition scenario is eventually decided upon.

3.  NAME OF PROJECT AREA: NUCLEAR MATERIALS ACCOUNTANCY

Rationale

  Proper nuclear materials accountancy (NMA) at FSU facilities reduces the risk that nuclear materials could be lost or otherwise removed without detection.

Objectives

  Overall: to improve NMA at key Russian facilities—in particular the Mayak RT-1 reprocessing plant, the Angarsk uranium centrifuge enrichment facility and in due course other Russian facilities.

  More specific objectives are defined and developed in the context of particular projects (eg development, delivery and installation of accountancy software/hardware packages).

Risks

  The projects are collaborative to the extent that "intellectual" (as opposed to hardware) input on the part of the Russian facilities has not been funded by DTI—such dependency brings with it some risk of delays in milestone delivery.

  Note: the CCR estimated some £1.5 million was required over 10 years for this activity.

  Project Status: This programme has been operating for several years and has been rolled into the FSU programme. Projects at Mayak and Angarsk are continuing—the projects are managed by UKAEA on behalf of DTI (as part of the UK Safeguards Programme) and involve exchange between British and Russian NMA specialists. Future projects are currently under early stage discussion, and may involve a small increase in the material accountancy budget.

4.  NAME OF PROJECT AREA: INTERNATIONAL VERIFICATION OF EXCESS WEAPONS MATERIAL

Rationale

  To provide the international community with assurance that nuclear materials declared excess to weapons requirements are indeed not re-used for weapons purposes.

  Overall: to establish an effective international verification regime for excess-weapons material disposition programmes.

Objectives

  Specifically: to contribute to funding IAEA verification of nuclear material from the dismantlement of Russian nuclear weapons.

Risks

  See project status notes—continuing uncertainty about the timing and extent of US and Russian programmes for the disposition of surplus military plutonium are compounded by uncertainties about the IAEA's role in verifying these programmes (eg its timing and costs).

  Note: the CCR estimated that expenditure over the next 10 years would be £3 million.

  * at present due to the delay in reaching agreement on Pu disposition it is unlikely any funds would be committed during the first part of 2004 (see below).

  Project Status: Russia, and the US and the IAEA have yet to reach agreement on arrangements for IAEA verification of material from the dismantlement of Russian nuclear weapons and the subsequent conversion of that material into forms not suitable for use in such weapons. In the absence of such agreement, and then endorsement of the IAEA's role in it by the IAEA's Board of Governors, it is not possible to be more precise about likely funding requirements and timescales (in which context it should be noted that implementing such verification does not now feature amongst the IAEA's expected accomplishments by 2003 but instead in its tentative budgetary planning for 2004 and 2005).

5.  NAME OF PROJECT AREA: NUCLEAR SAFETY PROGRAMME

Rationale

  To improve safety at nuclear reactors in CEE/FSU—and assist moves towards the early closure of these reactors.

Objectives

  To deliver safety improvements through small scale projects involving the transfer of technology, best practice, training of nuclear regulators and plant operators and management and some very small scale equipment supplies. There are specific objectives for the 20 odd projects supported under the programme.

Risks

  Risks include duplication of effort in reproducing activities that are being supported by other bilateral donors; failure to effect change through activities by not focusing projects onto recipients requirements; lack of impact through inability of recipients to exploit support.

  The budget was discussed at the Advisory Committee at its November 2001 meeting. A rising increase in the allocation for those programme areas was recommended and is shown above.

  Project Status: Proposals for the 2001-02 Nuclear Safety Programme were evaluated following an open EU wide tender, and 27 contracts were awarded. At the end of quarter three an additional seven projects were commenced, some of which will continue within financial year 2002-03. 24 projects have been completed at the end of quarter four; four projects are planned to be completed in financial year 2002-03 and six projects have slipped, such that they will be completed in 2002-03, although they had been planned to complete within 2001-02. In addition, the portfolio includes a further seven projects continuing from 2000-01, six projects were completed in 2001-02 and one will be completed in 2002-03.

  The launch of the 2002-03 programme took place in December and the majority of the associated work for this competition has been completed at the end of quarter four. The first stage in the competition has resulted in 71 proposals being submitted with a value of £13.4 million spread over a three-year period.—At the end of quarter four, contracts totalling just over £3.0 million for 2002-03 have been awarded or are planned. Further work is being undertaken in collaboration with NII to identify support programmes to the nuclear regulators in Bulgaria and Russia. Other activities are planned that will result in contracts for the total £3.5 million budget being allocated to projects in 2002-03.

6.  NAME OF PROJECT AREA: PHYSICAL PROTECTION OF PROLIFERATION SENSITIVE NUCLEAR MATERIALS

Rationale

  Ensuring that proliferation sensitive nuclear materials in FSU are adequately protected from theft and/or sabotage.

  Overall—to assist with the protection of proliferation sensitive nuclear materials in FSU to International standards.

Objectives

  Specifically, (a) to identify with Minatom additional projects by end December 2001 and (b) to provide physical protection systems for two icebreakers in the Atomflot fleet in collaboration with Norway and Sweden. Provisional start date April 2002 and completion January 2003.

Risks

  That the equipment supplied and fitted would either not be properly operated or maintained during its designed life. Projects are evaluated 6 and 12 months after completion and equipment warranted for two years by suppliers to minimise the risk. Also plan long-term evaluation as part of overall FSU Programme evaluation in 2003.

  Project Status: The UK collaborated with Sweden on providing a physical protection system for a nuclear-propelled cargo ship, the Sevmorput, in NW Russia. This project was successfully completed by the target date of September 2001. Further projects are under discussion with the Russian Ministry of Atomic Energy, but it may take some time to identify further suitable projects, as Minatom's recent suggestions were not considered suitable. Potential future proposals include protection systems for two icebreakers, 15 buildings on civil/military site and a proposal from the Russian Navy. We will also be exploring as part of the work on NW Russia whether any of those projects merit including physical protection elements (eg Andreeva Bay).

  The UK has been in discussion with potential Swedish and Norwegian partners and the Murmansk Shipping Company for the provision of a physical protection system for two icebreakers in the Atomflot fleet. Discussions held at DTI in November 2001 agreed the main areas requiring physical protection, and to proceed under a contract along the lines used for the Sevmorput project. It was agreed that the UK should meet 65 per cent of total project costs for the equipment and installation, the total UK contribution amounting to £736k for two vessels, subject to Ministerial approval of the proposal.

7.  NAME OF PROJECT AREA: DECOMMISSIONING IN CEE/FSU

Rationale

  To aid the closure of Chernobyl and other reactors in EU accession candidates.

Objectives

  Chernobyl to stay closed. Ignalina (Lithuania) Unit 1 closed by 2005 and Unit 2 by 2009. Kozloduy (Bulgaria) Units 1 to 2 closed by 2003 and Units 3 to 4 by 2008. Bohunice (Slovakia) Units 1 to 2 closed by 2008. Decommissioning for all these reactors to move forward.

Risks

  Beneficiaries extending the scope of the project and/or requesting increasing financial support to de-commissioning, beyond the scope of the current de-commissioning support funds, managed by the EBRD.

  Note: payments can be made in a lump sum to EBRD at any time during the financial year.

  Project Status: The UK has pledged

1.5 million to EBRD managed decommissioning funds for Ignalina and Kozloduy. In Q3 a similar pledge of

1.5 million was made for Bohunice (Slovakia). The latter fund has now been set up, and the

1.5 million for Bohunice was dispersed in Q3. Under the EBRD managed Nuclear Safety Account, support is also being extended for decommissioning facilities at Chernobyl—and further requests for UK assistance may be required.

8.  NAME OF PROJECT AREA: CLOSED NUCLEAR CITIES INITIATIVE

Rationale

  To prevent the transfer of nuclear weapons expertise in Russia to "rogue states".

Objectives

  Short Term: The provision of non-weapons employment to a specified number of Russian Federation (RF) nuclear weapons' scientists and technicians.

  Medium Term: Re-deployment/retraining of a specified number of Russian weapons' scientists to non-weapons projects/employment with a commercial focus.

Risks

  Delays in recruiting specialist project managers to develop projects and take forward projects.

  Failure to foster material commercial engagement in the Closed Cities because of the difficulties in operating therein.

  The CCR indicated expenditure of some £5 million would be required over the next 10 years for this area of work.

  Project Status: An Updated Strategy Paper was presented to the Inter Departmental Advisory Committee meeting in March 2002 and has now been approved by the representatives of all departments represented at the Committee. A submission to Ministers will follow at the earliest opportunity.

  Efforts will now be intensified to identify specific areas and projects for UK support. These efforts will be in close collaboration with the ISTC in Moscow, and with colleagues and experts in the ENCI and in the US and Russia.

9.  NAME OF PROJECT AREA: NW RUSSIA

Rationale

  Assist process of de-fuelling and decommissioning nuclear submarines in NW Russia, in order to diminish the risks of a nuclear accident or leakage of large amounts of radioactivity into the environment.

Objectives

  Overall: to increase the annual rate of decommissioning of submarines.

  Short term: to conclude bilateral Supplementary Agreement with Russia, by June 2002 and to start physical work on SNF interim storage facility, SNF cask transport ship, Andreeva Bay site characterisation and cutting up an early generation submarine projects in NW Russia immediately thereafter.

Risks

  The key risk remains the need to conclude the Supplementary Agreement without which we could not proceed with most of the NW Russia projects. Financial risks, as with all FSU Programme projects, will be minimised by close project management to ensure value of money, modular approach to project design and only paying on delivered milestones. There may also be construction delays for some projects.

  Note: the CCR estimated that some £20 million would be required over the next 10 years.

  Project Status: The first two projects in this policy area are ready to start. That is the SNF interim storage facility at Polyarnyi and, in collaboration with Norway, funding of the construction of a SNF cask transport ship. This work and other efforts on other projects are being held up by the continuing delay in concluding the Supplementary Agreement to provide cover on critical issues such as nuclear liability, tax and access. We expect to conclude the text and sign the Agreement before June 2002. Despite the delay we have pressed ahead in negotiating further projects. These include the SNF transport ship project with Norway mentioned above and the dismantling of a Victor class nuclear submarine. In addition, we have offered assistance for and are beginning work on a feasibility project to deal with the problem of SNF at Andreeva Bay. Current storage provisions for large quantities of SNF at the site is totally inadequate and represents a major risk of nuclear contamination. The feasibility work, to be concluded by 2003, will detail proposals for substantial remediation and new storage construction over a number of years,

10.  NAME OF PROJECT AREA: KEDO

Rationale

  Preventing North Korea from becoming a nuclear weapons state.

Objectives

  Implementation of the agreement between North Korea and the international community (KEDO) on the provision of two new light water reactors, in return for agreement by North Korea to abandon its nuclear weapons programme. The decommissioning and dismantlement of North Korea's existing graphite-moderated reactors.

Risks

  Uncertainty about the level of influence KEDO can exert on North Korea abandoning its weapons programmes. Breakdown of relations between North Korea and the US (a major stakeholder in KEDO) could lead to North Korea reneging on its commitments under the agreement.

—  The CCR originally allocated £3.5 million per annum to the KEDO project. The revised allocation is the amount required to meet the lower than anticipated EU contribution to KEDO.

—  The CCR indicated that some £10.5 million might be required over the next 10 years for this project. The UK has agreed to contribute to the EU KEDO project for five years, with funding agreed for the first three years from the FSU Programme.

—  The lower than anticipated spend in 2001-02 was due to a favourable £/

exchange rate. Treasury made this payment on behalf of DTI during 2001-02.

  Project Status: The construction of the reactors is at least eight years behind schedule, and work is progressing only very slowly. The original planned completion date of 2003 has now been revised to end-2010. As a result the bulk of KEDO funds are currently being used for the purchase of heavy fuel oil to meet North Korea's on going energy needs. The new US Administration is still reviewing its policy in this project (and on its relations with North Korea more generally). The EU is only a minor contributor to the KEDO project.

  Rising oil prices have resulted in a shortfall of funds in the KEDO project. The KEDO Executive Board sought additional bilateral contributions from EU member states (and others) last summer to cover this shortfall. The UK, in common with EU partners decided against the provision of any additional funds.

  A new agreement between the EU and KEDO, guaranteeing continued EU involvement in the project for five years was signed on 18 December 2001. The EU contribution for 2001 (20 million euro) has been transferred to the KEDO account in New York. A new delivery protocol with a timetable for meeting key milestones in the project has been drafted and discussion of it with North Korea should commence early this year.

11.  NAME OF PROJECT AREA: KAZAKHSTAN (DECOMMISSIONING OF THE FAST REACTOR AT AKTAU)

Rationale

  Reduce the threat of proliferation of fissile nuclear material and mitigate the humanitarian and environmental risks posed by the Aktau nuclear reactor.

Objectives

  The safe and irreversible shutdown and decommissioning of the Akau reactor.

Risks

  That international effort to decommission the Aktau reactor will continue to proceed in an unplanned way or may not be sustained at all.

  The CCR indicated that some £2.5 million would be required over the next 10 years for this project.

  Project Status: Discussions within the IAEA on the decommissioning of Aktau are continuing. The US is helping with the removal of fuel—the EU may offer help with more general decommissioning, although its present position is uncertain. The UK is one of the few countries with a comparable fast reactor undergoing decommissioning (at Dounreay) and there has already been some transfer of expertise from the UK to the Kazakhs on this problem. A paper on the proposal was presented to the FSU Programme Committee in July 2001.

  The DTI has confirmed with the IAEA that UK funding of $20,000 will be available to finance the Peer Review of the Top Level Decommissioning Plan currently being produced by the Kazaks with US/EC assistance.

  A further IAEA sponsored conference on Aktau decommissioning was held in March 2002 with UK officials participating. The Top Level decommissioning Plan is in an advance state of preparation and a first draft has been seen by the IAEA which expressed itself satisfied with the efforts now being made to complete it. The formal submission of the Plan is not now likely however before August 2002.

  In line with the Strategy Paper on Kazakhstan agreed by the Inter departmental Committee in July 2001, detailed discussions will shortly commence to further specify areas where the UK could fund assistance to ensure the completion of the Plan at the earliest opportunity.

  It remains the case that no decisions can be taken on the provision of UK funded design, technical or engineering assistance at the reactor site until the Top Level Plan has been Peer Reviewed. A further IAEA sponsored Conference will be convened as soon as this has been done.

12.  NAME OF PROJECT AREA: SOCIAL AND ECONOMIC IMPACTS OF NUCLEAR PLANT CLOSURE

Rationale

  Support wider objectives of plant closure through helping local communities address the social and economic consequences of closure.

Objectives

  Overall: to aid the economic diversification/regeneration of local regions in the FSU which are adversely affected by nuclear plant closure and in order to ensure high levels of operational safety during pre-closure operation of plants scheduled for early closure, where such closure has been requested by the international community.

  Current specific objectives:

—  to continue to promote the activities and capabilities of the International Chernobyl Centre (ICC) and to aim for self-sustainability of the ICC by 2004-05;

—  to investigate further projects in Slavutych, including the possibility of assisting with the communications infrastructure there;

—  to help with the setting up of a functioning "new business incubator" in the Visaginas area near the Ignalina plant in Lithuania—incubator set up by 2003;

—  in 2002-2003 to identify activities that may be undertaken in Lithuania, Bulgaria and Slovakia.

Risks

  Risks include lack of impact and duplication and/or lack of co-ordination with activities being pursued by other donors.

  The CCR estimated that some £1.5 million would be required over the next 10 years.

  Project Status: The UK is providing small-scale assistance to develop the ICC, principally through the development of ICC's communications strategy and capabilities, supported by a UK communications expert. An exploratory mission by BESO to the Visaginas region to work up plans for a business incubator approach to regional development has been completed and this has lead to a second phase of work, focused at developing entrepreneurial skills and knowledge in the region. Work has also been undertaken to develop a business case for a fibre optic cable link to Slavutyich.

  The Inter-departmental Advisory Committee meeting, held in March 2002, supported a proposal to develop the Social Consequences Programme in 2002. The approach of directing assistance to people directly affected by plant closure was endorsed and the future programme will be examining what more can be done to develop wealth creation and jobs in affected communities. Work in Lithuania and Ukraine will continue. Scoping projects will be undertaken to develop country specific plans for these countries and for Bulgaria and Slovakia. It is anticipated that a contract will be established under the call-off contract scheme to support this work.

  The 2001-02 programme had a budget of £250k. A continuing commitment to the existing project in Lithuania is valued at £108k. The Interdepartmental Advisory Committee supported an increase to the budget in 2002-03 to £500k, giving £518k for projects in the next financial year. Scoping activities will be used to develop proposals for the 2003-04 budget and programme.

  Notes:

—  Project information as of beginning of April 2002.

—  Project spend includes contracted out project management costs.

—  Includes payment for KEDO which has already been paid to HM Treasury and treated as an accrual.

FSU Programme

January-March 2002