title: Special Report No 25/98 concerning operations undertaken by the European Union in the field of nuclear safety in central and eastern Europe (CEEC) and in the new independent States (NIS) (1990 to 1997 period) together with the Commission's replies (submitted pursuant to Article 188c(4)(2) of the EC Treaty)

eurovoc_concepts:
Central and Eastern European Countries
Commonwealth of Independent States
EU programme
European Court of Auditors
activity report
nuclear safety

text: 9. 2. 1999 EN Official Journal of the European Communities C 35/1 I (Information) COURT OF AUDITORS SPECIAL REPORT No 25/98 concerning operations undertaken by the European Union in the field of nuclear safety in central and eastern Europe (CEEC) and in the new independent States (NIS) (1990 to 1997 period) together with the Commission’s replies (submitted pursuant to Article 188c(4)(2) of the EC Treaty) (1999/C 35/01) FOREWORD After the completion by late October of the bilateral discussion procedure relating to this report, on 10 November the Court then received new additions to the replies from the Commission, some of which seem to it to be questionable. However, so that publication of its report is not held up indefinitely, the Court decided to adopt it definitively at its meeting of 12 November 1998, regardless of the differences of opinion that still prevail on certain points. C 35/2 EN Official Journal of the European Communities 9. 2. 1999 LIST OF ACRONYMS AND ABBREVIATIONS ENEA — The European Nuclear Energy Agency belonging to the OECD (Organisation for Economic Cooperation and Development) IAEA — International Atomic Energy Agency (international organisation under the aegis of the United Nations) EBRD — European Bank for Reconstruction and Development DG IA — Commission Directorate-General responsible for external relations with CEECs and the NIS Euratom — European Atomic Energy Community ISTC — International Science and Technology Centre. It was established in 1992 and became operational in 1994. Its purpose is to prevent an outflow of engineers previously employed in the military sector NIS — new independent States of the former Soviet Union NSA — Nuclear safety account. The EBRD opened the special NSA account in March 1993 for a period of three years. Its operation was subsequently extended for a further three-year period in April 1996 NUSAC — G24 Nuclear Safety Assistance Coordination. Coordination unit set up by the Commission CEECs — Central and East European countries PHARE — action plan for coordinated aid to Poland and Hungary (subsequently extended to the remainder of the CEECs). It comprises programmes financed by the EU since 1990 to assist with economic restructuring in the CEECs RBMKs — Soviet-designed, graphite-moderated boiling-water reactors with no secondary circuit or containment building used to produce plutonium for military purposes. See also paragraph 14 of Annex 1 TACIS — technical assistance to the Commonwealth of Independent States. Programmes financed by the EU since 1991 to assist the NIS with their transition to a market economy TPEG — Twinning Programme Engineering Group, or the EEIG (European Economic Interest Grouping), established on 24 July 1992 in response to the Commission’s desire to rely on a single cooperation structure set up by EU electricity-generating companies responsible for pressurised-water nuclear reactors. The TPEG comprises EDF (France), Tractebel (Belgium), Magnox (United Kingdom), DTN (Spain), VGB (representing the German electricity companies RWE, KKE and GKN Gmbh), ENEL (Italy), GKN (Netherlands) and IVO/TVO (Finland) EU — European Union USTC — Ukrainian equivalent of the ISTC VVERs — Soviet-designed, pressurised-water nuclear reactors with a secondary circuit and containment building (excluding the VVER 440-230 reactor). See also paragraph 14 of Annex 1 WANO — World Association of Nuclear Operators 9. 2. 1999 EN Official Journal of the European Communities C 35/3 CONTENTS Paragraph reference Page 1. INTRODUCTION. 1. 1 — 1. 7 PHARE and TACIS nuclear-safety programmes. 1. 1 — 1. 5 The Court’s audit. 1. 6 — 1. 7 2. SUMMARY OF THE OBSERVATIONS. 2. 1 — 2. 13 The European Union’s approach. 2. 1 — 2. 3 Management of the operations. 2. 4 — 2. 8 Mobilisation of aid and the results. 2. 9 — 2. 13 3. THE EUROPEAN UNION’S APPROACH. 3. 1 — 3. 20 European integration. 3. 1 Objectives and resources. 3. 2 — 3. 4 Decommissioning and dismantling of reactors. 3. 5 — 3. 7 Supply of equipment. 3. 8 — 3. 9 Non-industrial aspects of operational safety. Euratom loans. 3. 10 3. 11 Multilateral coordination. 3. 12 — 3. 20 4. MANAGEMENT OF THE OPERATIONS. 4. 1 — 4. 20 Invitations to tender. 4. 1 — 4. 2 Supply agencies. 4. 3 — 4. 11 The Commission’s monitoring of the operations. 4. 12 — 4. 16 On-the-spot monitoring of programmes. 4. 17 — 4. 18 Cost of management. 4. 19 — 4. 20 5. MOBILISATION OF AID AND THE RESULTS. 5. 1 — 5. 23 Planning. 5. 1 — 5. 5 Budgets allocated for on-site activities. 5. 6 — 5. 7 Delays and the stage reached in implementing the operations. 5. 8 — 5. 14 Assistance to the safety authorities. 5. 15 — 5. 17 Safety studies and analyses. 5. 18 — 5. 20 Actual mobilisation of the appropriations. 5. 21 — 5. 23 6. CONCLUSION. 6. 1 — 6. 10 Overall assessment. 6. 1 — 6. 2 Effectiveness. 6. 3 Efficiency. 6. 4 — 6. 6 Economy. 6. 7 — 6. 9 Transparency of the operations. 6. 10 Annex 1 — Background to the PHARE and TACIS nuclear-safety programmes. Annex 2 — Operations audited and visits carried out. The Commission’s reply. 4 4 8 8 8 9 9 10 10 10 10 11 11 11 11 12 12 12 13 14 14 15 15 16 17 20 20 21 22 22 22 23 23 23 25 31 39 C 35/4 EN Official Journal of the European Communities 9. 2. 1999 1. INTRODUCTION PHARE and TACIS nuclear-safety programmes 1. 1. The accident at unit 4 of the Chernobyl nuclear reactor in 1986 drew attention to the importance of dealing with the safety problems posed by the stock of Soviet-designed nuclear reactors. Since 1990 international aid has been mobilised under the auspices of the G7 (1), the United Nations (IAEA), the OECD (ENEA), and the EU, whose Edinburgh (1992) and Corfu (1994) summits confirmed the guidelines to be followed in restructuring the nuclear sector in east European countries and closing the Chernobyl power plant. All of these measures were intended, as stated by the Council in its resolution of 18 June 1992 (2), to help the east European countries to render their stock of reactors as safe as western power plants. Throughout this period several initiatives were taken to coordinate international aid, whether by pooling the data available concerning existing aid programmes (creation of NUSAC at the Commission in 1992) or by establishing special multilateral financing instruments (creation of the NSA in 1993, management of which was entrusted to the EBRD). While the Court recognises, as the Commission points out in paragraph 5 of the general comments introducing its replies, that the PHARE and TACIS expenditure could not by itself achieve any more than limited results, the fact is, nevertheless, that the prime responsibility for coordinating the efforts made by the countries of the OECD and the other international organisations to assist the CEECs and the NIS in the restructuring Commission. This being so, the Court took the view that it was part of its remit to examine how the Commission had discharged this responsibility and to assess the scale of the progress actually made on the ground. their nuclear lay with sector and that first studies technical neglected. concerning operational-safety 1. 2. The the nuclear-powered electricity-generating sector revealed that the former Soviet system, driven by the nuclear needs of the military sector, focused on meeting production and requirements environmental matters were These design-related and technical problems were compounded by the need to establish powerful safety authorities that would be independent of the operators in these countries. Such authorities, acting as a counterweight to the operators are considered to be an essential precondition for safety in all western countries. Owing to the economic and social impact of the remedies envisaged and, in particular, the decommissioning of the most dangerous power plants (some RBMK and VVER 440-230 reactors), safety improvements had to be incorporated into an overall strategy for the energy sector in east European countries, where waste treatment posed acute difficulties, and the nuclear sector was socially and economically important and had therefore previously been given privileged treatment over other industrial sectors. All of these compelling factors, coupled with western economic interests, made intervention in this sector a particularly delicate matter. PHARE through 1. 3. Against this difficult multilateral and sectoral background, the main features of which are set out in Annex 1, since 1990 the EU has allocated almost ECU 850 million (3) to improving nuclear security and safety (4) in the CEECs and the NIS, and this resulted in payments totalling ECU 355 million by the end of 1997. Most Community aid has been implemented by the Commission and TACIS its programmes, under which a total of ECU 786,1 million, or 20 % of TACIS commitments and 2 % of PHARE commitments, have been allocated to nuclear safety. Table 1 provides a breakdown of these commitments by recipient country and according to the main fields of action covered by the related Commission decisions. According to the recipients, this financing covers only a limited proportion (a few per cent) of the modernisation programmes undertaken. On the basis of the information available, however, it is not possible to quantify the scale of these programmes or how far they have been implemented. (1) Canada, France, Germany, Italy, Japan, the United Kingdom and the United States of America. (2) Council resolution of 18 June 1992 on the technological problems of nuclear safety, paragraph 5 (OJ C 172, 8. 7. 1992, p. 2). (3) See Annex 1 — Table 1. 1. As a comparison, the cost of constructing a new power plant with four reactors with a total output of 5 000 MW of electricity is of the order of ECU 5 000 million. (4) The term ‘safety’ means all of the security measures strictly relating to the operation of nuclear power plants. The broader term of ‘nuclear safety’ includes, inter alia, the protection of the population and the complete nuclear-fuel cycle. 9. 2. 1999 EN Official Journal of the European Communities C 35/5 Breakdown of PHARE and TACIS commitments by field of action and country for the years 1990 to the end of 1997 Table 1 U C E n o i l l i m U C E n o i l l i m 300 300 250 250 200 200 150 150 100 100 50 50 0 0 350 350 300 300 250 250 200 200 150 150 100 100 50 50 0 0 Operational safety Generic studies and Safety authorities Fuel and waste Chernobyl l a n o i t a r e p O y t e f a s Russia i a s s u R design safety d n a s e d u t s y t e f a s n g s e d c i r e n e G i i y t e f a S s e i t i r o h t u a d n a l e u F e t s a w l y b o n r e h C Field of action i Ukraine, excluding Chernobyl l g y b n o d n u r e c h x e C , e n a r k U i l Chernobyl Kazakhstan Armenia l y b o n r e h C n a t s h k a z a K i a n e m A r TACIS Regional l a n o g e r i I S C A T Country Planning and management d n a g n n n a P l i t n e m e g a n a m ITSC/USTC C T S U C T S / I Decisions Contracts Payments Decisions Decisions Contracts Contracts Payments Payments Miscellaneous and s not allocated u o e n a d e t a c o t o n d n a l l e c s M i l l a Decisions Contracts Payments Decisions Decisions Contracts Contracts Payments Payments Bulgaria Czech and Slovak Republic Lithuania PHARE Regional a i r a g u B l d n a h c e z C k a v o S l s c i l b u p e R i a n a u h t i L E R A H P l a n o g e r i C 35/6 EN Official Journal of the European Communities D = decisions C = contracts P = payments l a n o i t a r e p O , y t e f a s e t i s - n o d n a e c n a t s i s s a s t c e j o r p d e t a i c o s s a s e i d u t s c i r e n e G d n a n g i s e d y t e f a s d n a e t s a w , l e u F - n o i s s i m m o c e d g n i o t e c n a t s i s s A y t e f a s s e i t i r o h t u a C T S U C T S I / , g n i n n a l P t n e m e g a n a m n o i t a u l a v e d n a s u o e n a l l e c s i M d e t a c o l l a t o n d n a l a t o T l a t o t e h t f o % Russia D C P 122,2 48,7 29,0 89,2 28,9 36,0 15,6 14,5 4,7 14,1 20,5 62,0 4,5 61,4 33,5 10,1 1,9 4,8 2,0 3,5 296 0,1 222,1 89,2 Ukraine, excluding Chernobyl Chernobyl Kazakhstan Armenia Regional NIS total Bulgaria Czech and Slovak Republics Lithuania Regional CEEC total D C P 89,4 72,0 45,1 17,2 27,8 9,2 5,3 0,1 15,4 21,5 4,4 3,1 3,0 4,4 D C P D C P D C P 5,7 5,6 50,5 1,7 9,6 1,0 7,9 1,4 0,0 0,0 59,0 4,8 2,0 0,9 0,2 D C P 6,0 54,6 20,1 17,7 45,5 38,5 6,5 1,0 4,0 8,5 2,5 0,2 0,8 0,5 6,5 6,5 7,9 2,8 8,0 2,5 157,4 112,3 61,7 0,2 69,5 57,0 10,6 0,8 5,3 0,2 11,5 1,0 7,9 13,4 8,7 13,2 8,7 95,73 3,4 96,4 75,9 5,0 D 39,4 101,8 C P 194,9 98,3 98,7 63,4 72,1 10,7 39,1 15,7 61,4 33,5 22,5 13,3 228,9 132,5 65,0 52,3 D C P 19,7 18,9 17,7 10,1 11,2 8,4 1,8 9,2 1,5 4,0 D 5,5 9,1 5,7 1,9 1,3 4,7 4,0 3,9 0,3 15,5 635,4 3,5 496,0 238,3 7,2 0,4 50,2 0,4 39,9 33,8 0,4 16,2 C P 1,4 1,3 4,6 4,4 0,5 0,5 0,2 0,2 0,3 0,3 6,9 6,8 D C P D C P D C P 0,5 0,7 0,5 17,1 18,3 7,9 12,8 43,0 1,1 27,5 4,2 48,9 12,2 8,8 3,2 18,4 21,4 39,1 27,4 27,5 17,1 10,6 4,7 22,9 0,6 19,9 7,5 27,5 9,9 79,8 0,9 0,9 1,4 2,3 1,4 3,0 0,8 7,3 4,9 1,8 6,7 5,9 7,5 2,3 82 2,7 66,0 26,2 2,7 150,7 4,3 114,3 68,2 9. 2. 1999 (million ECU) n o i t a t n e m e l p m i % s n o i s i c e d e h t f o 75 30 71 39 82 15 4 69 8 38 29 20 20 9 3 1 1 0 12 25 101 79 81 78 6 11 2 2 0 0 10 9 19 22 78 38 80 67 43 42 62 61 82 33 76 45 36 18 9 0 1 16 81 7 1 0 11 19 Total D 271,9 181,4 123,2 65,0 46,7 C P 234,0 125,6 126,1 80,4 82,8 15,4 62,0 25,6 61,4 33,5 29,2 18,3 14,7 18,2 786,1 7,8 610,2 306,6 100 100 100 78 39 % of the total % of the decisions D C P 35 41 21 23 26 16 5 14 10 8 10 8 11 10 38 6 6 5 2 3 100 100 100 2 C P 86 46 70 44 67 12 78 32 95 52 62 39 81 43 78 39 Source: Commission’s revenue and expenditure account (De´sire´e) as at 31 December 1997. regard 1. 4. The measures relating to fuels and radioactive waste include a figure of ECU 20 million allocated to to fissile materials. With monitoring decommissioning, the programmes concerned Chernobyl alone and were for a maximum of just ECU 59 million. Various other measures cover safety-related research (ECU 2 million), loans preparing (ECU 1,5 million), radiation-detection and alert systems (ECU 6,5 million), emergency off-site response (ECU 5 million), a study of electricity distribution (ECU 0,4 million) and various reserves (ECU 2,8 million). Euratom 1. 5. The programmes’ main priority comprises direct aid to nuclear power plants for operational safety, which takes up 35 % of the funds, or ECU 272 million. Table 2 shows the scheduled budget appropriations by country and type of reactor for power plants in east European countries. Table 3 shows the geographical location of Soviet-designed power plants operating these countries. in 9. 2. 1999 EN Official Journal of the European Communities C 35/7 Breakdown of PHARE and TACIS operational-safety programmes by recipient nuclear power plant Table 2 ) W M ( y t i c a p a c l a t o T 19 843 Operator responsible for on-site assistance Total appro- pria- tions allocated 119 1 900 Tractebel (B) 3 800 RWE (D) 3 700 Magnox (UK) 2 775 Scottish Nuclear (UK) 1 644 KKE-Emsland (D) (1) 560 Nersa (F) of which 0 3 2 - 0 4 4 R E V V 3 1 2 - 0 4 4 R E V V R E V V 15 11 K M B R 0 0 5 1 / 0 0 0 1 40 20 20 0 2 3 - 0 0 0 1 43 20 18 5 66 3 25 21 8 9 11 23 23 (million ECU) , 0 0 6 / 0 5 3 N B 6 - G P E 10 d e t a c o l l a t o N 1 9 1 5 5 1 6 7 34 109 15 1 1 3 1 2 1 8 7 10 10 25 19 19 2 2 20 18 20 20 19 9 12 1 1 89 26 25 21 8 9 10 10 5 5 6 20 20 6 3 2 1 1 1 1 1 17 43 272 4 24 49 1 40 1 5 1 2 39 111 15 11 11 18 Russia Kalinin (2 × V320) Balakovo (4 × V320) Sosnovy Bor (4 × RBMK 1000) Smolensk (3 × RBMK 1000) Kola (2 × V230 + 2 × V213) Beloyarsk (1 × BN 600) Novovoronesh (2 × V230 + 1 × V320) 1 720 RWE (D) Bilibino (4 × EPG-6) Kursk (4 × RBMK 1000) Appropriations not allocated Ukraine Rovno (1 × V213 + 2 × V320) Zaporozhe (6 × V320) South Ukraine (3 × V320) Khmelnitsky (1 × V320) Chernobyl (2 × RBMK 1000) Not allocated to a specific site Armenia 44 3 700 13 045 1 695 EDF (F) 5 700 GKN (D) 2 850 DTN (E) 950 DTN (E) 1 850 752 Medzamor (2 × V270-V230 variant) 752 ENEL (I) Kazakhstan Aktau (1 × BN 350) Not allocated to a specific country 150 150 Bulgaria 3 526 Kozloduy (4 × V230 + 2 × V320) 3 526 EDF (F) Czech and Slovak Republics Bohunice (2 × V230 + 2 × V213) Dukovany (4 × V213) Mochovce (4 × V213 under construction) Temelin (2 × V320 under construction) Not allocated to a specific site Lithuania Ignalina (2 × RBMK 1500) Hungary Paks (4 × V213) Romania Cernavoda (1 × PHWR, CANDU-Canada) Slovenia Krsko (1 × PWR, Westinghouse-USA) Not allocated to a specific country 3 192 1 632 1 560 2 600 2 600 1 730 1 730 620 620 620 620 Total for Central and Eastern Europe 12 288 Grand total for operational safety 46 078 (1) EDF replaced by KKE. Source: Commission decisions. Total for the newly independent States 33 790 229 40 C 35/8 EN Official Journal of the European Communities 9. 2. 1999 Location of Soviet-designed nuclear power plants operating in the CEECs and NIS Table 3 Source: http://atom. pnl. gov:2080/inspmedia/allmap98. gif — INSC database (ANL/United States Department of Energy). The Court’s audit to evaluate 1. 6. The Court’s objective was the implementation of the resources deployed by the EU since 1990 for the purpose of improving nuclear safety in the CEECs and the NIS, while taking account of the multilateral context and the coordination task entrusted to the Commission by the international community within the scope of the G7 and the G24 (5). 1. 7. Audits on the Commission’s premises focused on the operations of the PHARE and TACIS programmes and were supplemented by visits to the Ukraine, Bulgaria, Lithuania and the Russian Federation, and to several specialist organisations within the EU. (The various subjects of these audits are set out in Annex 2. ) The (5) See Annex 1, paragraph 8. in its work by an expert on Court was assisted the Ukraine, some nuclear-safety. With regard observations regarding the nuclear-safety programmes have been published by the Court in a Special Report concerning all of this country (6). the TACIS operations to in 2. SUMMARY OF THE OBSERVATIONS The European Union’s approach 2. 1. The intervention strategy, which was not explicitly stated by the Commission until 1996, is still confused as regards old-design reactors, decommissioning and dismantling, and waste treatment (see paragraphs 3. 2 to (6) Special Report No 6/97 concerning TACIS subsidies allocated to the Ukraine (OJ C 171, 5. 6. 1997). 9. 2. 1999 EN Official Journal of the European Communities C 35/9 3. 6). The urgent short-term requirements are not clearly defined (see paragraphs 3. 8 to 3. 10). There has been a delay in mobilising the financial instruments that could take over from PHARE and TACIS where the most expensive projects are involved (see paragraphs 3. 7 and 3. 11). 2. 2. With regard to coordination, the Commission, in the context of the mandate conferred on it by the international community (G24), has been unable to achieve more than an exchange of information between donors, the IAEA, the EBRD and recipients (see paragraphs 3. 13 to 3. 20). 2. 3. The Member States’ lack of a concerted approach towards agreements concerning third-party liability (see paragraph 5. 18) and instituting technical standards and safety regulations (see paragraph 3. 1), plus the lack of a clear contractual framework for PHARE and TACIS operations (see paragraph 3. 14), compounded by difficulties in communicating with some recipients (see paragraphs 4. 3 to 4. 4, 4. 17 to 4. 18, 5. 1, 5. 13 and 5. 18 to 5. 20), have stunted the development of relations of trust and partnership, although the latter is of strategic interest to the EU and its nuclear industry. Management of the operations frequently changing staff 2. 4. The disparate and numbers employed by the unit responsible for the programmes, the inadequate tools for managing the projects and monitoring the related accounts, and the lax management prevent the Commission from ensuring that the operations are monitored satisfactorily, problems are dealt with swiftly and the quality of the services provided by contractors is checked (see paragraphs 4. 12 to 4. 16 and 5. 14). 2. 5. The volume of contracts concluded without invitations to tender having been issued accounted for almost one third of the total (ECU 192 million), but there was no corresponding increase in the rate of implementation (see paragraphs 4. 1 to 4. 2 and 4. 11). 2. 6. The use of supply agencies as intermediaries between recipients and the managers of nuclear power plants in the EU that are responsible for on-site assistance complicated implementation, contributed to the delays, created tensions and enabled over-high advances to be paid, thus enhancing the picture of the mobilisation of appropriations (see paragraphs 4. 3 to 4. 10 and 5. 9). 2. 7. Some of the external bodies which the Commission used to assist it in planning work and in the appraisal of contracts (see paragraphs 4. 5 and 5. 4 to 5. 5) were set up on a case-by-case basis by creating an association of commercial companies which also held contracts financed under the programmes. The Commission delegated too many of its responsibilities in the planning field, thus undermining its authority and independence. 2. 8. The resources devoted to managing the programmes are not shown clearly in the Commission’s accounts and exceed the levels fixed by the Budget Authority, but have not remedied the weaknesses detected (see paragraphs 4. 19 to 4. 20). Mobilisation of aid and the results 2. 9. The implementation mechanism selected by the Commission proved particularly slow. Programmes at the power plants which posed most safety problems were the ones that made least headway (see paragraphs 5. 8 to 5. 12). Supplying equipment was often favoured over other aspects of the development of a safety culture. It has not been established whether the division of the budgets between power plants and the various types of measure was appropriate (see paragraphs 5. 6 and 5. 7). 2. 10. Once decisions had been taken, the content of the programmes underwent many changes. The lack of transparency caused misunderstandings and delays and enabled the most dynamic partners to reorient the programmes. Some projects were cancelled after considerable expenditure had been incurred. Some useful insufficient projects were scaled down, owing budgetary resources, while some appropriations also remained unutilised, notably because of amendments made to programmes that were already under way (see paragraphs 5. 1 to 5. 3). to 2. 11. Account was not taken of the fact that the granting of licences (7) by the safety authorities in the recipient countries safeguards satisfactory completion of in the day, and the equipment projects until procedure was not coordinated convincingly (see paragraphs 5. 15 to 5. 17). late 2. 12. Owing to the failure to communicate the results of studies costing a total of nearly ECU 40 million that were undertaken as part of the 1991 TACIS programme, their usefulness to the recipients is doubtful (see paragraph 5. 18). Moreover, the conditions imposed on Russian subcontractors taking part in the studies are extremely severe. There is a risk that the subcontracting procedures will allow contractors in the EU to make sizeable profits that cannot be verified (see paragraphs 5. 19 and 5. 20) 2. 13. At the end of the financial year 1997 the contracts entered in the accounts exceeded the value of actual contracts by 20 %, the result being that only 63 % of the decisions were covered by contracts and 37 % by (7) Authorisation to change installations and then to start operating new equipment. C 35/10 EN Official Journal of the European Communities 9. 2. 1999 payments. In the case of Chernobyl, where the situation is particularly difficult, the corresponding rates were 20 % and 8 % respectively. The lack of transparency in the structure of the budget and in the administration of the accounts deprives the managers and the Budget Authority of the means of ensuring and maintaining optimum allocation of the resources (see paragraphs 5. 21 to 5. 23). agreement has been concluded between the Commission and the recipients as to which reactors are to be closed down in the short or medium term, or on the conditions governing their continued operation. The Commission has made no allowance for the political, social and economic realities in its programmes and has not acted in a transparent manner, which has caused tension among the recipients (as is the case with the Kozloduy power plant). 3. THE EUROPEAN UNION’S APPROACH European integration 3. 1. At the end of 1997, owing to the absence of a binding legal basis, there was still no formal consensus at European level concerning technical standards in the area of the design and operational safety of nuclear installations (8). The 25 basic nuclear-safety principles in published by accordance with each Member State’s own technical standards and regulations, which has not facilitated the action the EU has been taking with regard to the safety authorities in the CEECs and the NIS. IAEA are still implemented the Objectives and resources 3. 2. Between 1990 and 1994 the EU’s nuclear-safety programmes were decided on and implemented in the absence of an explicitly defined overall strategy. During this period PHARE focused on problems funding concerning the VVER 440-230 reactors in Kozloduy, Bulgaria, on the basis of the action programme drawn up by WANO in 1991. The TACIS programmes first of all comprised studies that would enable the EU partners to gain an understanding of the technology involved and analyse the safety problems inherent in Soviet-designed nuclear power plants. They were then directed towards providing on-site assistance and equipment, supplemented by assistance to the safety authorities. It was only following repeated requests by the Council (9) and the Parliament that the entire matter was scrutinised in 1995, which resulted in the Commission proposing a strategy covering all of the fields of action concerning nuclear safety to the PHARE/TACIS Committee in June 1996. 3. 3. 54 % of Russia’s nuclear energy was still being generated by RBMK reactors as late as 1996. The RBMK power plant in Ignalina, Lithuania, and the VVER 440-230 reactors in Kozloduy, Bulgaria are of paramount economic importance to both of the above countries. No (8) Paragraph V. 3 of the Communication from the Commission on the nuclear industries in the EU (an illustrative nuclear programme according to Article 40 of the Euratom Treaty), COM(97)401 final, 25 september 1997. (9) Specific request made at the meeting of the PHARE/TACIS Committee on 27 July 1995. 3. 4. The Commission has made no distinction in its programmes between the objectives and the resources on the basis of the age or recentness of the reactors from the point of view of safety. Improvements that would allow the life of the reactors to be extended beyond the normal duration and those contributing solely to short-term operational safety have not been defined. Given the uncertainties as to when old plants should be closed down, such clarification was a prerequisite for ensuring consistency in the planning and selection of projects. Decommissioning and dismantling of reactors 3. 5. Despite the importance of the decommissioning and dismantling of reactors that cannot be modernised, and of waste-processing, the mobilisation of appropriations in their regard has been very low. It is true that dismantling operations are technically arduous and very costly; despite the experience gained by the EU in dealing with some specific cases (10), it is also faced with economic and practical difficulties in this area. further ECU 100 million 3. 6. In its comments on the 1995, 1996 and 1997 budgets, the Budget Authority asked the Commission to devote ECU 150 million in 1995, the same amount to in 1996 and a environment-related projects, notably in connection with dismantling RBMK reactors. Wording of this sort is not precise enough to constitute a real framework and to encourage monitoring and the submission of detailed reports concerning the objective of dismantling RBMK reactors, which, other than in the case of Chernobyl, has not been written into the Commission’s programmes. 3. 7. The TACIS programmes have not allowed perceptible results to be achieved in dismantling the Chernobyl power plant. Although a multilateral account was set up at the EBRD in 1997 later than planned, it constitutes a better response to the need for true international cooperation the TACIS bilateral programmes, which were given limited resources and did not place sufficient focus on cooperating with the other aid donors. than (10) Grundremmingen A and Greifswald in Germany, Chinon A and Saint-Laurent A in France, Windscale AGR and Berkeley in the United Kingdom and Vandellos 1 in Spain. 9. 2. 1999 EN Official Journal of the European Communities C 35/11 Supply of equipment 3. 8. It is the Commission’s view that equipment must be supplied to cope with emergency situations. The Court’s examination of the time used for implementation revealed that these urgent requirements have not always been met. The managers responsible for the Kola and Sosnovy Bor power plants confirmed that these time limits made it impossible to finance emergency measures. recipients than TACIS. The 3. 9. The supply of pilot equipment was also intended to enable technology to be transferred and to pave the way for larger-scale industrial projects financed from sources other recognise and appreciate the pilot nature of the projects. However, although successes such as that achieved in Kalinin in respect of replacing electrical-penetration mechanisms this approach, demonstrate industrial cooperation, which is needed for technology transfer, had not developed very far by the end of 1997. the appropriateness of Non-industrial aspects of operational safety Such involve activities, which In addition to piloting industrial projects, on-site 3. 10. assistance should also focus on improving the safety culture. training, organisation and procedures, have rarely taken the form of projects, but have instead been incorporated into the general specifications governing on-site assistance. These tasks have therefore continued to be too poorly defined and have not been sufficiently supervised by the Commission to allow them to be properly developed, monitored varies evaluated. The considerably from one power plant to another. The Balakovo plant, which has proved most active in this area, should serve as a reference. situation and Euratom loans 3. 11. Although it has only been possible to contract Euratom loans since March 1994, no borrowing worthy of mention had taken place by the end of 1997, even though the preparation of three important projects had started in 1995 (see paragraphs 4 and 5 of Annex 1). the international community at ECU 1 480 million. Owing to the fact that many donors, including the Commission until mid-1997, have not provided the necessary information, NUSAC’s data comprise only approximate figures. Cooperation with equipment the EBRD (NSA) in supplying it was 3. 13. Even though the Commission’s and the EBRD’s objectives are the same as regards the supply of equipment, to establish close impossible cooperation between these two institutions at the power plants at which they were both working to this end (Kozloduy, Sosnovy Bor, Kola and Novovoronesh). It is true that all of the invitations to tender financed by the Nuclear Safety Account (NSA) managed by the EBRD are open to all of the donor countries, whereas the Commission’s invitations to tender are restricted to EU countries, but the fact that both institutions have separate equipment programmes means that any efforts at cooperation are redundant. For example, there is no coordination of the programmes involving two projects at the Kola power plant (safety valves and leak detection). 3. 14. Furthermore, financing agreements the NSA comprise a conventional framework that could be applied to Commission supply programmes, given that financing agreements in respect of the latter are either over-concise or simply do not exist, because the NSA agreements lay down the conditions concerning the future cessation of the operation of the oldest RBMK and VVER 440-230 units, the conduct of safety analyses at each power plant and compliance with modernisation programmes, which also cover the equipment supplied. 3. 15. The budgets provided for in the NSA financing agreements concerning the granting of licences for equipment supplied fall far short of the amounts needed, whereas the TACIS programmes make a far greater contribution in this area. The complementary nature of the measures, and cooperation between the Commission and the NSA managers in assisting the safety authorities, must therefore be enhanced. Multilateral coordination Cooperation with the other partners Coordination of G24 (NUSAC) assistance 3. 12. The G24 unit for ‘coordinating’ nuclear safety set up at the Commission has not carried out genuine coordination. This is because it has no responsibility within the assistance programmes, especially those of the Commission. The shortcomings identified by this unit have rarely provided the basis for action taken by the donors. NUSAC has estimated the funds committed by its 3. 16. The Commission makes no reference contracts to the working tools (11) developed by the IAEA. Transparency and a willingness to cooperate with the IAEA on the part of the Commission continue to be inadequate. in (11) Listing and classification of safety problems, ASCOT guidelines for auto-evaluation of the safety culture, ASSET and OSART methods of assessing operational safety, etc. C 35/12 EN Official Journal of the European Communities 9. 2. 1999 3. 17. Some of the measures financed by PHARE and TACIS fall within the framework of the Member States’ respective commercial strategies and action programmes. Owing to their economic importance, these bilateral programmes are actually linked with the commercial strategies of the major European operators. However, given that the interconnection between these programmes and those of the Commission is not explained, it is difficult to establish the degree of consistency and efficiency of the operations as a whole. 3. 18. Whereas reliance on WANO, and then on the TPEG, was at first justified on the basis of turning to account the expertise of the western operators, WANO’s methodologies and experience were not incorporated to a sufficient extent by the Commission into its contract clauses. Consequently, practices as using indicators, performing peer reviews or performance applying best practice on a broad scale were not implemented in a standardised manner. such 3. 19. The contribution to the ISTC was paid out of the TACIS budgets in accordance with procedures that were quite inappropriate to the manner in which the former operates. For example, in 1997, although the availability of appropriations was not a cause for concern, the Commission’s procedures caused ISTC serious financing difficulties, forcing it to ask other founding members to cover payments which the Commission was late in making. With regard to the Ukraine, at the end of 1997 the EU had still not taken part in financing the Ukrainian Science and Technology Centre, despite the relevant provisions made under the 1996 programme. the 3. 20. The OECD’s Nuclear Energy Agency (NEA) has recommended that a strategic safety-research plan be drawn up in collaboration with the main partners and in a spirit of willingness to share research findings (12). The Commission’s strategy regarding PHARE and TACIS operations in the field of safety-related research makes no mention of the ISTC’s activities and synergy is not sought in this area. And yet the ISTC has financed 23 projects (ECU 6,5 million) in the field of nuclear-reactor safety and 41 others in the area of environmental safety with regard to nuclear activities (ECU 19,6 million). 4. MANAGEMENT OF THE OPERATIONS Invitations to tender 4. 1. Since the nuclear-safety programmes began, the Commission has made extensive use of Article 118(2) of (12) Report on the requirements regarding research into the safety of Soviet-designed reactors, published by the NEA at the beginning of 1998. the Financial Regulation (13) to conclude, by means of private treaty, service contracts involving large sums. Use of such procedures accounted for ECU 192 million out of operations totalling ECU 610 million, i. e. 31 %. 4. 2. In July 1994 the Financial Controller approved a derogatory framework proposed by DG IA that was based on a list of the types of measures and reasons justifying derogation. This framework did not, however, specify the supporting documents that were to be provided, notably so as to ensure that, irrespective of the procedure applied, the economically most advantageous tender would be selected, in accordance with Article 117 of the Financial Regulation. Implementation of the framework in resulted appraising contracts (experts’ fees). in delays and difficulties Supply agencies Appraisal of supply projects 4. 3. The Commission decided to make use of supply agencies in 1994 to assist it in administering supply contracts, since it doubted the impartiality and quality of the services provided by the managers of nuclear power plants in the EU responsible for on-site assistance in this particular area. This mechanism gave rise to tensions that were hardly conducive to efficient work and it watered down responsibilities. 4. 4. The details of the purchasing procedures that involve intervention by supply agencies were not approved by the Commission until October 1996. They involve 35 stages: 11 fall under the terms of reference of on-site assistance, the supply agency is responsible for 20 and the Commission for two. While the recipients are signatories to the contracts, they are responsible for only two stages: incorporating the requirements connected with the granting of licences by the safety authorities into the specifications, and final acceptance of the supplies. Contrary to the provisions of the TACIS regulation, recipients do not always participate in the financial evaluation of tenders. (13) Service contracts may be awarded by private treaty when the measures involved are low in value (ECU 0,3 million and subsequently ECU 0,2 million, according to the successive TACIS to non-profit-making bodies, extensions to measures already under way, or where the invitation to tender has been unsuccessful. regulations) short-term, entrusted or 9. 2. 1999 EN Official Journal of the European Communities C 35/13 The entry in the accounts and the reality of the operations 4. 5. The Commission’s management accounts show an amount of ECU 167 million for TACIS (14) contracts with supply agencies. This represents an estimated purchase volume of ECU 162,5 million, and agencies’ fees and remuneration for overseeing these purchases, which, on the basis of the contracts, are estimated at ECU 4,5 million (or 2,8 % on average). This practice gives an inflated view of budget implementation as far as the volume of contracts is concerned. In fact, the value of the supply contracts concluded by the agencies was only ECU 44,6 million at the end of 1997 and the expenditure shown in the management account should be reduced by ECU 118 million to reflect the actual contracts. 4. 6. Thus, the view provided by the statement of the commitments was enhanced to show ECU 65,8 million for Russia (15), ECU 38,5 million for operations connected with Chernobyl (16) and ECU 13,7 million for the other power plants in the Ukraine and Armenia (17). Furthermore, most of the contracts with the supply agencies were concluded at the end of the year, since the manner in which they are entered in the accounts allows large volumes of commitments to be made available very quickly and, in so doing, improves the rate of utilisation of appropriations at the year-end. 4. 7. With regard to payments, advances totalling ECU 43 million that were intended to cover supply contracts and paid into special bank accounts held by the agencies are recorded as final payments in the Commission’s accounts. At the end of 1997 the total volume of payments made by the agencies was only ECU 24,3 million. The Commission’s management accounts should therefore be revised downwards by ECU 18,7 million, if an accurate view of these transactions is to be gained. The payment into special bank accounts of sums in excess of those actually required has the effect of increasing payment the appropriations (18). consumption of 4. 8. The contracts concluded by the agencies and the the payments Commission’s accounting system or in its management system. they make are not recorded in (14) See Annex 2, Table 2. 4. Only one PHARE contract was concluded at the end of 1997 for ECU 1 million (reference No ZZ95280701 97-0779). (15) Contracts with Italtrend and Crown Agents. (16) Contracts with GTZ (Gesellschaft für technische Zusammenarbeit). (17) Contracts with Europa and Fichtner. (18) See also paragraph 5. 8 of the Court’s Annual Report (OJ C 349, financial year 1997 the concerning 17. 11. 1998). 4. 9. At the end of 1997, according to the agencies, the bank interest generated on the special accounts amounted to ECU 2,2 million and had not been entered in the accounts or audited by the Commission since the programmes had begun. 4. 10. All these practices deprive the accounts of the transparency needed to allow the transactions to be monitored and audited. Contractual procedures 4. 11. Of the 14 TACIS contracts concluded with five supply agencies since January 1994 (see paragraph 4. 5), only the first two, concluded in January and February of 1994, were awarded following an open invitation to tender. A further four were concluded following a restricted invitation to tender. The remaining eight, involving a purchasing volume of ECU 82 million and fees of ECU 2,4 million, were concluded by private treaty, despite the fact that the fees and, more especially, the extent of the activities involved justified an invitation to tender and technical evaluation. The Commission’s monitoring of the operations 4. 12. DG IA’s administrative unit does not have the implementation of the staff needed to ensure that programmes is monitored correctly. Since the unit was set up in 1993, 25 persons have been appointed to it (five in 1994, six in 1995, 10 in 1996 and four in 1997) and 17 staff have left (three in 1995, five in 1996 and nine in 1997). Of the 22 staff working in the unit at the end of 1997, five were due to leave in the first half of 1998. Out of the seven Category A managers, three (a seconded national expert and two auxiliary staff) only had term contracts, two of which expired at the end of March 1998. Three of the seven Category B managers also had term (auxiliary) contracts, one of which expired at the end of March 1998. This turnover of staff and the precarious nature of the posts resulted in piecemeal management that has been directly prejudicial to working discipline and to the monitoring of measures in the past. 4. 13. No methodology is consistently applied by the Commission’s managers and they have no reliable tool to assist them in monitoring and managing projects. There are weaknesses in the computerised management system (De´sire´e). The administrative organisation is improvised and does not provide for compiling structured files that are kept up to date in accordance with clear guidelines. The monitoring carried out by Commission departments does not enable them to control the development of the C 35/14 EN Official Journal of the European Communities 9. 2. 1999 operations (see paragraphs 5. 2 and 5. 3) or to resolve swiftly any problems raised with them by recipients or providers of on-site assistance (see paragraphs 5. 12 and 5. 13). 4. 14. The Commission subcontracts follow-up and on-the-spot evaluation of measures to consultants. It was not, however, until September 1995 that nuclear-safety operations in Russia were made subject to this procedure and monitoring did not begin until mid-1996. As a result many operations, including all the contracts under the 1991 programme have not been monitored, or were monitored only belatedly. Moreover, the problems raised by consultants in their evaluation reports were not resolved promptly by the Commission (on-site assistance at Sosnovy Bor and assistance to the safety authorities in the Ukraine). On-the-spot monitoring of programmes 4. 17. The 1992 TACIS programme provided for a budget of ECU 1 million for the management and coordination of projects by a Joint Management Unit (JMU) based in Moscow (21). The JMU comprises staff of the Ministry of Atomic Energy (Minatom), the safety authority (GAN), the body managing nuclear power plants (REA), some other Russian organisations involved and western experts. Its purpose is to ensure that TACIS measures are implemented properly and to facilitate relations with western institutions. The need for a structure of this nature was reiterated in the 1993 TACIS programme, in which it was pointed out that this matter had been discussed with the Russian authorities within the more general framework of a draft protocol of agreement specifically concerned with nuclear safety. The protocol was signed in February 1995, but only dealt with matters concerning third-party liability. the Interim invoices concerning services which were for 4. 15. adequately backed up by supporting documents have on several occasions been paid instead of being rejected, with the Commission departments merely asking the contractor to supply the proof at a later stage. The resolution of problems financial settlement of contracts that arise when intermediate payments are made is thus postponed, in some cases until the final-payment stage (19), when it is too late for the contractor to be able to take the corrective action that sound financial management of the contract would have dictated from the moment the first intermediate payment had been made. At the end of 1997, for example, there were a large number of invoices that had still not been paid by the Commission. Furthermore, there is no procedure or contractual provision requiring the contract accounts to be closed within a specified period after the final payment, so that any disputes can be resolved, the project accounts reflect the reality of the operations and the allocation of any residual balances can be decided in good time (20). by undertaken clearance work 4. 16. The the Commission in 1997 in connection with the financial settlement of PHARE and TACIS contracts, which was loss of background knowledge complicated by the resulting from the turnover of contract staff and the lack of sound administrative practices, was not accompanied by a single measure to prevent such situations from recurring. (19) Contract Nos 94-0046, 93-0504, 94-1281 and 95-0242 provide examples of this situation. (20) 15 of the 43 contracts audited showed outstanding balances totalling ECU 5,9 million on 31 December 1997, even though the contracts had expired more than a year earlier (93-0958, 94-1263, 93-0533, 94-0120, 94-0491, 94-0116, 93-0410, 94-0547, 95-0775, 95-0774, 94-1281, 93-0972, 95-0190, 93-0895 and 94-0028). 4. 18. When discussions were held with representatives from the Russian Ministry of Atomic Energy in October 1997, the latter stated that they were distressed by the lack of progress made in setting up the JMU. Two contracts were eventually concluded in November 1997, so that it could be funded up until September 1999, and were charged for 1994 (ECU 0,7 million) and 1996 (ECU 0,3 million). Given that the Commission Delegation in Moscow did not monitor the nuclear-safety programmes, the absence of a JMU prevented any continuous on-the-spot monitoring of the programmes in Russia from taking place until the end of 1997. the programmes to Cost of management 4. 19. Prior to 1996 the use of operating appropriations to finance technical assistance for the Commission was forbidden, but since then it has been governed by the notes (remarks) to the budget (22). However, the report submitted by the Commission at the beginning of 1998 concerning the use of this technical-support ‘facility’ provides no the resources information concerning allocated by DG IA to support the nuclear-safety programmes. The figure of ECU 29,2 million entered in the accounts, i. e. 5 % of the total value of contracts concluded since 1990 (23), does not reflect the full amount. For example, it does not include fees of ECU 1,8 million paid to supply agencies, nor the resources allocated by on-site assistants for the administration and technical monitoring of operations, which are difficult (21) A sum of ECU 1 million was also set aside for a Joint Management Unit based at Kiev in the Ukraine. (22) In aggregate, this expenditure must not exceed 2 % of TACIS appropriations 3,5 % and of PHARE appropriations. (23) See the ‘Planning, management and evaluation’ column in Table 1. 9. 2. 1999 EN Official Journal of the European Communities C 35/15 to identify as a result of the Commission’s weak accounting requirements as regards the content of technical assistants’ reports. 4. 20. The total cost of managing the programmes and projects (chargeable to administrative and operating appropriations) is not evident (24) from the Commission’s complex mechanism. The 5 % entered in the accounts exceeds the standards fixed as of 1996 by the Budgetary Authority, but does not avert the management weaknesses that were detected. 5. MOBILISATION OF AID AND THE RESULTS Planning 5. 1. Between 1990 and 1992, during the initial stages, the projects selected for inclusion in programmes were proposed by western experts and produced results that were of limited practical use to the recipients (25). From 1993 onwards cooperation focused on projects better suited to the requirements. However, the drawing-up of annual programmes has always raised difficulties and misunderstandings among recipients, especially in Russia, owing to the priorities selected. Not one project was mentioned, even on an indicative basis, under the 1993 and, subsequently, 1994 programmes for Sosnovy Bor. The projects were finalised a posteriori. With regard to the other Russian power plants, the use to which the budgets adopted in 1993 would be put could only be determined when the 1994 programme was drawn up. of revealed On-the-spot communication and explanations, which was not helped by the Commission’s rare presence on site, also led to misunderstandings that were detrimental to smooth cooperation. visits lack that the at Sosnovy Bor, the display of safety parameters and then the management and control information system of the maintenance unit at Kalinin) or losing control over elements of contracts (evaluation of RBMK reactor safety). Similar risks apply to the project for modernising the control room in Sosnovy Bor that is now being prepared; (b) two important projects, the Nikiet technical centre (ECU 2 million) and the reactor core protection at Kola (ECU 4 million), were cancelled, but the budget balances (ECU 3,3 million) were not reallocated. The latter project was cancelled after ECU 2,7 million had been paid in respect of studies which were not followed up with the investments originally planned; imposed (c) several useful projects (water chemistry in Kola and fire-detection sensors and the monitoring of fuel loading in Balakovo) were scaled down, owing to the limits budget appropriations allocated to the project or power plant under the annual programme concerned. In such cases, the Commission should evaluate the usefulness of maintaining the projects by proposing the transfer to them of funds that would otherwise not be used; indicative the by (d) work that was not covered by the terms of the contracts was carried out because the Commission did not react when developments in a situation revealed specifications were initial inappropriate (assistance to the safety authorities in Lithuania). that the 5. 3. For this reason the content of the programmes has varied within the budget allocations to each power plant, and the operations have often moved in the direction sought by the most dynamic party. It has been difficult to maintain overall consistency because of the number of parties involved and the diversity of the operations. 5. 2. After the Commission had decided on the projects, there were several cases where those that had been included in the programmes were cancelled, amended or new elements had been added. The Commission did not, therefore, always have control over the development of the programmes’ content and the allocation of resources: 5. 4. Since 1992 TPEG has become increasingly involved in discussing and drawing up Commission programmes. The Commission has not, however, been represented during many of the visits made to recipients and has over-delegated its responsibilities in this area (26). (a) in the case of operations split up into stages financed by successive annual programmes, the results of each stage were not always evaluated before the next stage was finalised and launched. In several cases this losing shortcoming resulted control over the content of projects (the computer network and then the operational management system the Commission in 5. 5. Little use was made of the Joint Research Centre’s (JRC) former relations with the nuclear community in eastern Europe as in consultation with recipients. It was not until the end of regards planning measures (24) See also paragraphs 5. 37 to 5. 39 of the Court’s Annual Report concerning the financial year 1997 (OJ C 349, 17. 11. 1998). (25) Minutes of the Cooperation Forum for VVER Regulators held from 27 to 29 August 1997 in Finland. (26) The Court made observations concerning the conditions governing its public the Commission’s delegation of responsibilities in its Special Report No 1/96 concerning the MED programmes (OJ C 240, 19. 8. 1996, paragraphs 39 to 57). C 35/16 EN Official Journal of the European Communities 9. 2. 1999 the financial year 1997 that the Commission decided to entrust the JRC with the task of drawing up the terms of reference governing projects included in the TACIS programmes, which had, until then, been the task of is TPEG. This manner of allocating responsibilities more fulfilling its decision-making responsibilities properly than the former practice was. Furthermore, the JRC is independent of operators in the nuclear sector, whereas TPEG, irrespective of its ties with the EU, is not in a position to distance itself totally from its members’ industrial interests. the Commission and programme-preparation conducive to Budgets allocated for on-site activities Russian power plants involve industrial equipment. Few of the projects concerned other aspects of improving operational safety, despite the emphasis placed on this area since the 1992 TACIS programme: (a) measures concerning organising staff and taking the (improving person/machine consideration the and into training factor human procedures, interface); (b) measures accompanying the supply of equipment to improve its utilisation safety aspects of (documentation, reporting of incidents and other events, inspection, maintenance and training); the 5. 6. It can be seen from the list in Table 4 that most of the projects connected with on-site assistance at four (c) technology transfer to ensure that measures can continue because equipment is produced locally. Nature of the projects connected with on-site assistance at four power plants visited in the Russian Federation Table 4 (million ECU) Projets RBMK Sosnovy Bor VVER 213/230 Kola VVER 320 Total Kalinin Balakovo Amount Operational-monitoring systems Maintenance-management system Subtotal for computer systems Control and safety valves Waste treatment Water chemistry and leak detection Conduit cleaning and filtering Spare parts Modernisation of control rooms Fire protection Power supply Fuel loading Turbine vibration Measurement of neutron flows in the reactor 4,29 4,29 3,00 0,20 3,00 0,20 0,90 Tools Electric-penetration mechanisms Hydrogen concentration Radiation protection (ALARA) Emergency cooling pumps Steam flowmeter Corrosion monitoring Subtotal for industrial equipment Quality control and organisation Training Probabilistic safety evaluations Subtotal for other projects Budgets not allocated or cancelled Total set aside for the programmes 2,00 3,00 2,30 1,00 1,50 0,60 7,30 10,40 0,50 0,50 1,97 14,06 0,30 0,30 0,85 11,55 2,50 2,00 4,50 2,15 0,09 1,62 0,80 0,55 1,10 1,25 1,00 0,48 0,85 0,70 0,30 0,10 10,99 0,38 15,87 3,00 0,20 0,86 3,97 1,41 0,50 0,84 1,00 0,47 0,25 12,50 1,30 0,70 2,00 0,65 15,15 6,79 2,00 8,79 7,15 6,29 4,78 4,77 3,16 3,00 2,20 1,94 1,90 1,25 1,00 0,95 0,85 0,70 0,60 0,30 0,25 0,10 41,19 1,30 1,20 0,30 2,80 3,85 56,63 % 12,0 3,5 15,5 12,6 11,1 8,4 5,6 5,3 3,9 3,4 3,4 2,2 1,8 1,7 1,5 1,2 1,1 0,5 0,4 0,2 72,7 2,3 2,1 0,5 4,9 7 100 Source: On-the-spot visits and on-site assistants’ reports. The amounts relate to the contracts signed or, where contracts have not yet been signed, the estimated budget. 9. 2. 1999 EN Official Journal of the European Communities C 35/17 5. 7. The uniformity of the TACIS annual budgets for operational safety that are allocated to each power plant (around ECU 4 million per annum per plant) is in marked contrast to the widely differing situations prevailing among them. These appropriations are also divided uniformly between on-site assistance and projects. It has not been established whether this splitting-up of funds in the case of equipment purchases is efficient. Delays and the stage reached in implementing the operations Delays in preparing contracts 5. 8. Table 5 provides a breakdown of the time that elapsed between the Commission taking its decision and the contract being signed for the operations audited. The longest delays apply to assistance provided to safety authorities (882 days on average), and to supply contracts (an average of 705 days), whose administration is entrusted to the supply agencies. This delay of almost two years is additional to the time taken to prepare decisions, which actually resulted in the Commission deciding on most of the programmes at the end of the financial year. Time lapses between the Commission taking its decision and contracts being signed in respect of the operations audited Table 5 s y a D 1 400 1. 400 1 200 1. 200 1 000 1. 000 800 800 600 600 400 400 200 200 - – Bistand på stedet e t i s - n O e c n a t s s s a i Bistand til sikkerhedsmyndighederne Undersøgel-ser og analyser af sikkerheden Bistand til Kommissio-nen Leveringer (direkte kontrakter) Mindste antal dage fra afgørelsen til undertegnelsen af kontrakten Gennemsnitlige antal dage fra afgørelsen til undertegnelsen af kontrakten Højeste antal dage fra afgørelsen til undertegnelsen af kontrakten o t e c n a t s s s A i s e i t i r o h t u a y t e f a s i s e d u t s y t e f a S s e s y a n a l d n a e h t o t e c n a t s s s A i i i n o s s m m o C s e i l p p u S ) s t c a r t n o c t c e r i d ( Leveringer (delegerede kontrakter) Alle kontrakttyper s e i l p p u S d e t a g e e d ( l ) s t c a r t n o c f o s e p y t l l A s t c a r t n o c Type of contract Minimum time lapse between the decision and signature of the contract Mindste antal dage fra afgørelsen til undertegnelsen af kontrakten Gennemsnitlige antal dage fra afgørelsen til undertegnelsen af kontrakten Average time lapse between the decision and signature of the contract Højeste antal dage fra afgørelsen til undertegnelsen af kontrakten Maximum time lapse between the decision and signature of the contract Type of contract On-site assistance Assistance to safety authorities Safety studies and analyses Assistance to the Commission Supplies (direct contracts) Supplies (delegated contracts) All types of contracts Minimum time lapse between the decision and signature of the contract Average time lapse between the decision and signature of the contract Maximum time lapse between the decision and signature of the contract (in days) Number of contracts audited 43 741 42 121 474 217 42 308 882 493 400 682 705 511 713 1 063 987 763 840 1 227 1 227 17 3 10 10 3 16 59 C 35/18 EN Official Journal of the European Communities 9. 2. 1999 (in days) Situation regarding other supply projects (delegated contracts) still under preparation on 31. 12. 1997 Average time lapse between the decision and approval of the specifications Average time lapse between the approval of the specifications and 31. 12. 1997 Total time lapse between the decision and 31. 12. 1997 Number of operations audited Specifications being drawn up Specifications approved, contract yet to be concluded 799 518 725 1 317 8 9 5. 9. The contracts concluded with the supply agencies are nothing more than intermediate instruments that provide no indication of the situation regarding supply operations. At the close of the 1997 financial year, only 16 of the 38 operations audited were covered by contracts, which had been signed an average of 705 days (27) after the date on which the Commission had taken its decision. Five had been cancelled before the specifications had been approved. The preparation of the remainder, which all related to Russia, also took an abnormally long time. On 31 December 1997 the specifications concerning eight of these operations had still not been approved after an average 725 days following the decision date. In nine other cases the specifications had been approved, but the contracts had still not been signed an average of 1 317 days after the Commission had taken the corresponding decision. Stage projects reached in implementing operational-safety the stage reached summarises 5. 10. Table 6 in implementing the TACIS operational-safety programmes for the years from 1992 to 1997 in respect of the Sosnovy Bor (RBMK 1000), Kola (VVER 440-230 and 440-213), Kalinin and Balakovo (VVER 1000-320) power plants. At the end of 1997 only 14 of the 52 projects connected with on-site assistance under the 1992 to 1995 programmes at the above-mentioned four power implemented (all at Kalinin and plants had been Balakovo). Two projects were in the course of being implemented and 11 had been cancelled. The remaining projects, including those under the 1996 and 1997 programmes, were still in preparation. TACIS programmes for the years 1992 to 1997 relating to on-site assistance and improving operational safety in Kola, Sosnovy Bor, Kalinin and Balakovo (Russian Federation) Table 6 U C E n o i l l i m % 25 25 20 20 15 15 10 10 5 5 0 0 80% 90% 100% 100 90 80 70 60 50 40 30 20 10 0 70% 60% 50% 40% 30% 10% 20% 0% Programmes 1992 to 1997 Programmes 1992 to 1997 Programmes 1992 to 1997 Contracts concluded Contracts concluded Contracts concluded Payments made Sosnovy Bor Sosnovy Bor Kola Kola Kalinin Kalinin Balakovo Balakovo Power plants Payments made Payments made Planned: proportion of the Previsto: parte dei projects allocated to the progetti nella dotazione power plant under the budget destinata alla centrale Previsto: parte dei progetti nella dotazione destinata alla centrale Realizzato: parte dei progetti nei contratti conclusi Implemented: proportion of Realizzato: parte dei the projects covered by the progetti nei contratti contracts concluded conclusi Sosnovy Bor Sosnovy Bor Kola Kola Kalinin Kalinin Balakovo Balakovo Total Total Power plants (27) 446 days to approve the specifications and 259 days to conclude the contract. 9. 2. 1999 EN Official Journal of the European Communities C 35/19 (million ECU) Sosnovy Bor of which On-site assistance Associated projects Kola of which On-site assistance Associated projects Kalinin of which Balakovo of which On-site assistance Associated projects On-site assistance Associated projects Number of contracts 16 6 10 19 6 13 35 6 29 33 6 27 Total 103 of which On-site assistance Associated projects 24 79 Programmes Contracts concluded Payments Budget 19,08 5,02 14,06 18,00 6,45 11,55 22,73 6,86 15,87 19,73 4,58 15,15 79,54 22,91 56,63 % of the budget Number of contracts Amount % of the budget % of the contracts Amount % of the contracts % of the budget 100 26 74 100 36 64 100 30 70 100 23 77 100 29 71 6 5 1 6 5 1 11 3 8 12 5 7 35 18 17 7,71 4,72 2,99 6,26 5,98 0,28 9,78 7,02 2,76 8,62 3,65 4,97 32,38 21,37 11,01 40 94 21 35 93 2 43 102 17 44 80 33 41 93 19 100 61 39 100 96 4 100 72 28 100 42 58 100 66 34 2,16 1,35 0,81 3,37 3,09 0,28 6,63 3,87 2,76 4,75 1,79 2,96 16,91 10,10 6,81 28 29 27 54 52 100 68 55 100 55 49 60 52 47 62 11 27 6 19 48 2 29 56 17 24 39 20 21 44 12 Source: The Commission’s programmes and accounts and the supply agencies’ reports. 5. 11. With regard to the same four power plants, while 93 % of the indicative budgets earmarked for on-site assistance were covered by contracts at the end of 1997, the proportion was only 19 % in the case of the projects related specifically to on-site assistance. Even though the project contracts were to be concluded shortly after the on-site assistance contracts, serious delays were noted at most of the power plants. This being the case, in the end the duration and cost of the on-site assistance contracts were disproportionate to the actual projects they were supposed to accompany. The Commission took no significant steps to check this trend, even though it became evident when the 1992 programme was implemented. In the two oldest power plants, where the needs were most urgent (Sosnovy Bor and Kola), the results achieved account for exceptionally low sums, despite sizeable investment in technical assistance. This imbalance is striking in the case of Kola, where payments account for just 2 % of the budget for the projects, despite the fact that 48 % of the amounts earmarked for on-site assistance were disbursed. 5. 12. The main reasons for projects being delayed were: (a) the extreme slowness with which purchasing procedures and, in particular, matters concerning the origin of equipment are dealt with, which is compounded by the Commission departments’ failure or tardiness in reacting to problems referred to them (water analysers and computer equipment at Kalinin and spare parts at Kola and Balakovo); (b) administrative tends inertia to give the that impression that tendering procedures are in progress in situations where a technical or commercial monopoly exists (waste incineration at Kola), instead of regulating these situations by applying alternative procedures (28) that will ensure that supplies are obtained at a reasonable price; (c) the granting of licences by the Russian safety authorities concentrations, water chemistry and monitoring the bituminisation of waste in Kalinin); (combating hydrogen (d) late recognition of the scope for synergy between the programmes at the various power plants (safety valves at Balakovo and Kalinin); (e) the unsatisfactory standard of the specifications and technical evaluations (vibration analysis at Kalinin, water chemistry at Balakovo and safety valves at Kozloduy); (f) the lack of satisfactory procedures governing the preparation and monitoring of mixed projects combining supplies and computer developments (computer network at Sosnovy Bor, simulators at Kola and maintenance management at Kalinin). (28) Western operators faced with the same problem use substitute procedures, such as itemising and analysing prices or concluding framework contracts. C 35/20 EN Official Journal of the European Communities 9. 2. 1999 5. 13. Both recipients and on-site assistants highlight the failure to respect the timetables set out in the initial action plans, and the unforeseeable nature of the actual timing of the delivery of supplies, which is particularly important when equipment can only be installed during the power plants’ annual shut-down periods. The main grievances concern the slowness in preparing calls for tenders and contracts, the complexity and sluggishness of the Commission’s procedures, the fact that there are no timetables that are binding on the various parties, the low level of awareness concerning the state of progress of the files and the inferior role accorded to recipients in terms of project management, particularly as regards evaluating tenders and issuing acceptances. likely that these increase in the powers of the safety authorities. In Russia it appears latter procedures will increasingly slow down the execution of the programmes, because of slowness in understanding and taking account of the existing regulations, albeit in an uncoordinated manner. The same is also true of the tasks and resources needed to apply them. The role of on-site assistance as a catalyst in relations between the partners is also a determinant of success in this area. The Commission should therefore ensure that the experience acquired in connection with the new procedures at each power plant is promptly shared with the other sites. in given since, the quality of implementing projects 5. 14. The progress made the on-site depends primarily on assistance-providers the method of organisation chosen, they are, realistically speaking, the only ones who can take charge of the operations. The Commission’s supervision has lagged too far behind to enable services to be brought into line with optimum practice, which has led to widely differing results depending on the types of measures and the power plants involved. Assistance to the safety authorities in the European licences, despite 5. 15. Significant progress has been made the assistance provided to the safety authorities in respect of granting to harmonise standards and regulations (see paragraph 3. 1). In Russia, EU assistance has helped the safety authorities to establish legislative instruments and general procedures enabling them to set up a framework for implementation of the modernisation programmes. These authorities’ activities are, however, hindered by the limited financial resources available to them. failure 5. 16. The Commission’s approach towards granting licences for the equipment it finances, termed the ‘two-plus-two approach’, consists of providing, for each project, assistance to the operators within the framework of on-site assistance, on the one hand, and, on the other, assistance to the safety authorities in respect of granting licences. As in the case of the assistance given to the operators, the east European safety authorities are assisted by their west European counterparts, who thereby transfer know-how to them. The problem with this approach in achieving coordination and cooperation between four partners. the difficulty lies in 5. 17. The problems connected with the granting of licences came to light at a late stage as far as the equipment financed by TACIS is concerned, owing to delays in carrying out programmes and the gradual Safety studies and analyses 5. 18. In June 1997 the Russian authorities had received only one final report concerning the studies that had been provided for at a cost of some ECU 40 million, of which some ECU 34 million was paid, under the 1991 TACIS programme. Several large contractors pointed to Russia’s non-ratification of the Vienna Convention and doubts concerning the civil-liability arrangements as reasons for refusing to forward the results of the studies to the recipients, despite the further clarifications provided in the Protocol to the Agreement signed between the Commission and the Russian Federation in February 1995. Under these conditions, the usefulness of these studies to the recipients and their impact on the substance of the Russian modernisation programmes can only be diminished. the contractor and 5. 19. The study contracts concerning design safety are awarded mainly to Russian design institutes by means of subcontracts. The specifications in the subcontracts are often identical to those in the main contract, which makes it extremely difficult to evaluate the respective workloads of the EU contractors and their Russian subcontractors. The way in which the work is divided between is, however, essential as far as the transparency of the prices is concerned, because, according to the contracts, the western experts’ fees are 10 to 15 times higher than those paid equivalent qualifications. In one of the cases examined (study of the embrittlement of the reactor vessels at Kola and Novovoronesh), the value of the subcontract which the Commission imposed on the tenderers without making an adequate prior analysis had to be renegotiated upwards after the main contract had been awarded. the subcontractor east European experts with to 5. 20. The subcontracts contain a very one-sided clause which stipulates that the payments to the subcontractor may only be made after the Commission has paid the invoices issued by the main contractor. In three cases (29) the Russian subcontractors did not receive a large (29) Contract Nos 93-0490, 93-0502 and 95-0844. 9. 2. 1999 EN Official Journal of the European Communities C 35/21 proportion of the amounts owing to them from the Commission’s contractors, even though all the work stipulated in the subcontracts had been carried out. The slowness with which both the contractors and the Commission settle the financial aspects of contracts is damaging to the subcontractors and to the partnership with the EU. Actual mobilisation of the appropriations 5. 21. Table 7 provides an overview of the Commission decisions actually implemented via contracts as at 31 December 1997. The volume of the contracts and payments recorded in the management accounts has been corrected in the table to remove the main anomalies detected in connection with the description of the 1991 TACIS programme allocations in the abovementioned accounts and especially the contracts with the supply agencies. PHARE and TACIS decisions covered by actual contracts as at 31 December 1997 Table 7 (million ECU) 300,0 300,0 250,0 250,0 200,0 200,0 150,0 150,0 100,0 100,0 50,0 50,0 U C E n o i l l i m – - t i e h r e h c s s b e i r t i e B y t e f a s l a n o i t a r e p O , i t s n e e d i d u u S t e s n e c g o i r z e e b n t r e a u G a B n g g i n s u e g e d s u d A n a l s n e e d i r t ö i r h o e b h - s t t u i e a h r e y h c t e i S f a S , l l f f e e ä t f s b A a w e o d t s n n a n e r l B e u F l y b o n r l e y h b c s o T n r e h C , l g n d u n n a a p m g m n a r i g n o n r P a P l t l t g n n e u m a w e r e g V a n a m / C T S C U C T T S S U C T S / I I s u d o n u e s n e a g i t l s l e n o c S s M i l i d e e t t i t M a c e n o e l s l e a w t e o g u n z t h d c n n a i Beschlüssexxxxxx Decisions Beschlüssexxxxxx Tatsächlich vergebene Verträge Actual contracts Tatsächlich vergebene Verträge Tatsächliche Zahlungen Tatsächliche Zahlungen Actual payments Field of action C 35/22 EN Official Journal of the European Communities d e r e t n e s t c a r t n o C s t n u o c c a e h t n i 228,6 85,9 54,8 32,3 50,5 29,2 61,4 67,6 n o i t a c i f i s s a l c e R S I C A T 1 9 9 1 f o 5,4 40,2 7,2 −52,8 s n o i s i c e D 271,9 181,4 79,8 64,2 59,0 46,7 65,0 18,2 s e s a h c r u p f o e m u l o V e h t y b e d a m s e i c n e g a y l p p u s l a u t c A s t c a r t n o c s t n e m y a P e d a m −75,9 −3,6 158,1 122,5 −38,5 62,0 32,3 12,0 29,2 61,4 14,8 120,6 46,3 19,8 10,5 4,8 18,3 33,5 52,7 n o i t a c i f i s s a l c e R S I C A T 1 9 9 1 f o 5,0 34,1 5,8 −44,9 Operational safety Generic studies and design Safety authorities Fuel and waste Chernobyl Planning and management ISTC/USTC Miscellaneous and not allocated 9. 2. 1999 (million ECU) s e c n a v d a d e s i l i t u n U s t n u o c c a l a i c e p s n i l a u t c A s t n e m y a p −18,7 106,9 80,4 25,6 10,5 4,8 18,3 33,5 7,8 Source: Audit of the Commission’s revenue and expenditure account (De´sire´e) as at 31 December 1997. Total 786,1 610,2 — −118,0 492,2 306,6 — −18,7 287,9 In total, 63 % of the appropriations allocated 5. 22. under the decisions result in contracts and 37 % in payments. This actual level of mobilisation of appropriations is especially poor in the case of the operations concerning Chernobyl (20 % in the case of contracts and 8 % in that of payments) and fuel and radioactive waste (16 % for payments). 5. 23. The appropriations for which contracts still have to be concluded amount to ECU 294 million, rather than the ECU 176 million shown in the management accounts. This volume of appropriations results from decisions that are, on occasion, old and does not always correspond to interests of sound the actual requirements. In the management with due regard to the proper use of public funds these allocations should be examined carefully and, with the recipients’ agreement, the programmes should either be closed or there should be a reallocation, taking account of the updated requirements. 6. CONCLUSION Overall assessment 6. 1. The EU’s intervention in the field of nuclear safety in east European countries was motivated by the desire to protect their populations from the consequences of a Chernobyl-type accident and also, within the framework of the PHARE and TACIS programmes, to set up a partnership between the nuclear-sector industries of both the EU and eastern Europe and to integrate it into a market economy. It was with this twofold prospect in mind the Commission allocated almost ECU 850 million (30) for programmes to support nuclear safety in the CEECs and the NIS between 1990 and that 1997, ECU 786 million (31) of which was committed under the PHARE and TACIS programmes, resulting in payments worth ECU 307 million (32). 6. 2. Although progress has been achieved in a field of intervention that was new to the EU and in which there had previously been little opportunity for international cooperation, the audit of the operations showed that the results have been achieved too slowly and that the programmes’ short-term objectives had not been achieved by the end of 1997, owing to both ambiguities at the strategic level and implementation procedures that were not really appropriate to this specialised and very complex environment. Moreover, at the end of 1997 there was no methodology to enable an overall evaluation of the progress of the safety arrangements at each power plant. The international conference in 1999, where the intention will be to evaluate the progress made, and it is also working on establishing the safety indicators that are currently lacking. Under these conditions it is not at this time possible to produce an objective report on the progress that has been made. Consideration must therefore be given to concrete measures that will increase the effectiveness, efficiency, economy and transparency of Community action. to organise an IAEA is Effectiveness 6. 3. The lack of clarity and realism in the strategy (see paragraphs 3. 1 to 3. 11), the closed-circuit development of the PHARE and TACIS programmes (see paragraphs 3. 12 to 3. 20) and the Commission’s excessive transfer of responsibility to third parties (see paragraphs 4. 3, 5. 4 to (31) See Table 1. This amount includes the contribution to the ISTC and USTC totalling ECU 65 million. (30) See Table 1. 1 in Annex 1. (32) See Table 1. 9. 2. 1999 EN Official Journal of the European Communities C 35/23 5. 5) resulted in prevarication and procrastination as regards the action to be taken, a lack of consistency in the allocation of resources (see paragraphs 5. 1 to 5. 3 and 5. 6 and 5. 7) and delays which undermined the value of EU action (see paragraphs 5. 8 to 5. 14). Better account should be taken of the economic circumstances prevailing in the recipient countries when the strategy is revised, especially as regards the future of older-design power plants. Cooperation with other partners, especially the IAEA and the EBRD, as well as with the recipient States, should be increased. The strategic and contractual frameworks need to be clarified in order to promote mutual trust and cooperation and, in addition, the targeted objectives must be defined jointly beforehand by the EU and the recipients. Furthermore, priority attention should be paid to developing and using indicators, in collaboration with the IAEA, that will enable the effectiveness of the programmes and safety developments at each power plant to be measured. Efficiency 6. 4. The departments responsible for executing the programmes should be merged and equipped with managerial and staff resources that are equal to the complexity and scale of the task and able to act with the necessary speed of action which, since 1990, has never been the case (see paragraphs 4. 12 to 4. 16). The Commission should consider redeploying its managerial staff a Directorate-General whose area of specialisation is more suited to managing technically complex projects than is the case at present. A reorganisation of this nature would reduce the effort of interdepartmental coordination, the efficiency of which has yet to be proven. It would allow the highly specialised skills that are available to the Commission to be put to better use. programmes allocating and the to 6. 5. These departments should be in a position to guarantee control of cooperation and permanent relations with the recipients, without excessive reliance on intermediaries. Within the framework of on-the-spot monitoring, the functions of planning, implementing and evaluating projects strengthened. The should be departments responsible for them should be given the authority and resources to enable them to identify problems promptly and resolve them in good time. 6. 6. Lastly, the procedures that were at the root of many of the delays must be reexamined and adapted to the particular technological constraints in this sector in accordance with best practice (see paragraphs 4. 3 and 4. 4 and 5. 12). Economy 6. 7. The transparency of account entries (see paragraphs 4. 5 to 4. 10 and 4. 19 and 4. 20) should make it possible for the accounts to become genuine management tools that can serve as indicators of the performance obtained and prevent the counter-productive freezing of funds where measures have not been defined or have already allocation of been overtaken by appropriations that have not been mobilised via contracts (ECU 294 million, see paragraphs 5. 21 to 5. 23) should be examined light of requirements and results. fully and updated events. The the in 6. 8. The matter of subcontracting certain measures to institutions or enterprises in the recipient countries should be reviewed, as there is a risk that western contractors will be in a position to obtain profits in excess of the commercial margins normally applicable to their sector of activity (see paragraph 5. 19), to the cost of the Community budget, by having some of the work entrusted to them carried out by subcontractors in east European countries. Furthermore, direct cooperation between the EU and some of these institutions or companies in the recipient countries would establish the confidence that is necessary to both parties and is still often lacking (see paragraphs 4. 17 and 4. 18, 5. 1 and 5. 18 to 5. 20). 6. 9. There are no tendering procedures for contracts with on-site assistants and they are rare in the case of supply agencies, which results in fees being high (see paragraphs 4. 1 to 4. 2 and 4. 11). They are, by contrast, excessively cumbersome where supply contracts are involved, which results in implementation being delayed (see paragraphs 4. 4 and 5. 12). The Commission should be guided in this area by the best practice of other donors, so as to ensure that the prices obtained are reasonable, that rules of origin are not applied at the cost of promptness or the measures’ consistency with those of other donors, and that the recipients are more fully involved in the main stages of the procedure. In any case, the rules concerning the use of the derogation system need to be defined so that a sudden loss of control does not have adverse repercussions on the Community budget (see paragraph 4. 2). Transparency of the operations 6. 10. Owing to the specialised nature of the operations in support of increased nuclear safety in east European countries, they should be shown separately from the amounts for PHARE and TACIS programmes in the EU budget. Clear identification of measures in the nuclear field would thus enable the budgetary authority to monitor the measures in a more transparent way, by requiring the Commission to submit regular, detailed reports on the conduct of the programmes and progress recorded (see paragraph 3. 6). C 35/24 EN Official Journal of the European Communities 9. 2. 1999 This report was adopted by the Court of Auditors in Luxembourg at its meeting of 12 November 1998. For the Court of Auditors Bernhard FRIEDMANN President 9. 2. 1999 EN Official Journal of the European Communities C 35/25 ANNEX 1 Background to the PHARE and TACIS nuclear-safety programmes Community background In 1975 the Council adopted a resolution (1) defining the Commission’s role with regard to the 1. technological problems of nuclear safety. Since these problems extend beyond the Community’s borders, the Commission was to act as a catalyst for Member States’ initiatives, seek a common position within international organisations, promote the progressive harmonisation of safety requirements and criteria and, on these bases, submit to the Council the optimum draft Community provisions. 2. The Chernobyl accident in 1986 revealed the extent of the safety problems posed by existing Soviet-designed nuclear reactors. Under the mandate laid down in the Euratom Treaty (2), Community action was at first restricted to protecting the public from radiation in the event of a nuclear accident (3). In June 1992 the Council adopted a new resolution concerning nuclear safety (4) which replaced the 3. 1975 resolution in the light of the cooperation with the CEECs and the NIS and called on the Member States and the Commission: (a) to increase their joint measures with these countries; (b) to seek to raise nuclear installations in east European countries to safety levels comparable with those applied in the Community; (c) to act in a coordinated manner, within the IAEA, to define a system of internationally accepted nuclear-safety criteria and requirements. Euratom loans 4. Euratom loans are limited to 50 % of project costs. Where EBRD co-financing is involved, the cumulative total with the Euratom financing may not exceed 70 % of a project’s total cost. The loans must be guaranteed by the recipient State. The projects must form part of the global energy plan and be proven to be economically viable. These various factors make the consideration of loan applications a complex matter. As of 31 December 1997 no loan had yet been granted, but three projects were under consideration: (a) a loan of ECU 100 million, applied for in August 1995, which was to be supplemented by French, German and Russian export credits and a national loan, to finance a ECU 220 million project to modernise units 5 and 6 of the Kozloduy power plant in Bulgaria. If the loan agreement can be signed before the end of 1998, the application will have been under consideration for three and a half years; (b) a loan of ECU 623 million, applied for in July 1995, which was to be supplemented by a loan from the EBRD and by the State’s own funds to finance a ECU 1 265 million project to modernise unit 2 at Khmelnitsky and unit 4 at Rovno in the Ukraine. If the loan agreement can be signed in July 1998, the application will have been under consideration for three years; (c) a loan of ECU 335 million, applied for in December 1995, which was to be supplemented by the State’s own funds, for a project to complete and modernise Kalinin unit 3 in Russia, the provisional estimated cost of which was ECU 670 million. In February 1998 consideration of the project was slowed down by the Russian party’s failure to communicate financial information needed for the project evaluation. (1) Council resolution of 22 July 1975 on the technological problems of nuclear safety (OJ C 185, 14. 8. 1975, p. 1). (2) The Euratom Treaty does not relate directly to the safety of nuclear power plants. However, the obligations arising from Chapter 3, concerning radiological protection, and the safeguarding of fissile materials entrusted to the Commission under Chapter 7, are in practice connected with the safety measures taken at power-plant level. (3) Council Directive 89/618/Euratom of 27 November 1989 on informing the general public about health-protection measures to be applied and steps to be taken in the event of a radiological emergency. (4) Council resolution of 18 June 1992 on the technological problems of nuclear safety (OJ C 172, 8. 7. 1992, p. 2). C 35/26 EN Official Journal of the European Communities 9. 2. 1999 5. While recourse to Euratom as regards large-scale operations has increased little, borrowing from banks in the EU, particularly in Germany, have been used to finance smaller-scale projects by the power plants at Sosnovy Bor (simulator) and Balakovo (waste-processing installations). Multilateral background 6. In response to the international community’s expectations, the operators of 144 nuclear power plants worldwide met in Moscow on 15 May 1989 and founded the WANO association to promote the improvement of nuclear power plant safety and performance. In July 1990 WANO decided to draw up a programme for improving the safety of VVER 440/230 reactors. This programme was submitted in July 1991 and endorsed by the IAEA’s Nuclear Safety Committee (INSAG). Implementation of this programme began in Bulgaria with measures financed under the PHARE programme. In order to extend its activities to other power plants, WANO set up a VVER Steering Group comprising the operators of the Novovoronesh, Kola, Bohunice and Kozloduy power plants and western operators. When the TACIS on-site assistance programmes were launched in 1993, the EU asked WANO to perform the coordination and advisory functions. The VVER Steering Group has extended its activities to all types of reactor of Soviet origin and took the name ‘WANO Advisory Committee Paris and Moscow’. In parallel, in 1990, the IAEA began working with the east European countries to set up safety 7. programmes agreed at international level. Furthermore, in 1994 the IAEA took the initiative of promoting a Convention on Nuclear Safety, which was signed by 66 countries at the end of 1997. 8. In view of the volume of finance that needed to be mobilised for the east European countries, in 1992 (5) the members of G7 asked the member countries of G24 to supplement their bilateral programmes with a multilateral fund and to strengthen the coordination mechanisms. The multilateral fund was set up at the EBRD in March 1993 and called the NSA (Nuclear Safety Account). In order to strengthen international coordination, a structure called NUSAC was set up within the Commission which had already been given a general mandate to coordinate G24 aid to east European countries at the G7 Paris summit in 1989 (6). 9. With regard to Chernobyl, in 1994 (7) the G7 and the EU agreed on an additional action plan and the related Protocol to the Agreement was signed with the Ukraine in December 1995. This plan was to lead up to the closing of Chernobyl by the year 2000 and, in consideration of that, to assist with the completion of three reactors that were under construction on the sites of the Zaporozhe, Rovno and Khmelnitsky power plants. In the case of unit 4 at Chernobyl, a plan to construct a protective mantle (SIP) was added to the 1995 Protocol with the Ukraine in 1997. Following the G7 Denver summit in June 1997, a new multilateral fund was set up at the EBRD to finance this protective mantle. In September 1997 the Commission proposed to the Council that a maximum contribution of ECU 100 million be allocated to this fund out of the TACIS appropriations for 1998 and 1999. 10. Table 1. 2 gives an idea (the database set up by NUSAC is incomplete) of the volume of the international community’s contributions towards nuclear safety in the CEECs and NIS. 11. This aid was provided at a time when the situation for the nuclear-energy sector was unfavourable in economic terms and commercially difficult. The traditional markets of the nuclear industries in EU countries and North America are shrinking. Although investment programmes to replace and modernise power plants currently in operation exist, the prospects that new units will be constructed are very limited. The prospects are greater in Japan and the Far East and very close links have been created between the nuclear industries of Japan and the United States in order to foster cooperation and take advantage of these opportunities. (5) Conclusions of the G7 Munich summit (Group of 7 most developed countries) of 10 July 1992. (6) The G7 Paris summit in July 1989 entrusted the Commission with the task of coordinating aid provided by the 24 most developed countries (G24) for Poland and Hungary, which was subsequently extended to cover the other CEECs. The G7 London summit (July 1991) called for specific aid and coordination to be developed in the field of nuclear safety. The G7 Munich summit (July 1992) extended this aid in the nuclear field to the NIS. The general coordination mandate given to the Commission remained in force during these successive extensions. (7) G7 Naples summit in July 1994. 9. 2. 1999 EN Official Journal of the European Communities C 35/27 12. Possible commercial outlets in east European markets, which were closed in the past, and the development of industrial cooperation with the nuclear industries in these countries are of strategic importance for the EU’s nuclear sector. 13. Table 1. 3 details the financing agreements concluded by the EBRD under the NSA. Background in the recipient countries 14. The majority of the reactors in the CEECs and NIS are Soviet-designed RBMK or VVER reactors. There have been three generations of RBMK technology. The first of these reactors was put into service in 1973 (Sosnovy Bor 1) and the most recent in 1990 (Smolensk 3). VVER technology has also passed through three main generations. The VVER 440-230 technology, which was put into service between 1972 (Novovoronesh 3) and 1982 (Kozloduy 4), is the oldest. It was followed by VVER 440-213 technology, which went into service between 1982 (Paks 1 and Kola 3) and 1988 (Dukovany 4). The most modern generation, the VVER 1000-320 class, which went into service between 1981 (Novovoronesh 5) and 1995 (Zaporozhe 6), is still being used for the units under construction (Rovno 4, Khmelnitsky 2 and Kalinin 3). The stock of Soviet-designed reactors is, on average, no older than that in western countries. The age or modernity of a reactor is relevant in terms of the extent to which safety was taken into account when it was designed, rather than the year in which it went into operation. From the point of view of safety, the VVER 1000-320 reactors are closest to western designs. 15. The difficult economic situation in the CEECs (particularly Bulgaria), and especially in the NIS, is impeding the implementation of these countries’ modernisation programmes, which include the western aid programmes and substantial calls on borrowed funds, including Euratom loans. C 35/28 EN Official Journal of the European Communities 9. 2. 1999 Table 1. 1 Appropriations allocated to nuclear safety in the CEECs and NIS by the European Union between 1990 and 1997 Budget headings and managing departments Appropria- tions allocated (million ECU) of which 1990 1991 1992 1993 1994 1995 1996 1997 PHARE and TACIS programmes 786,1 3,5 73,6 109,3 113,2 119,0 133,0 132,5 102,0 of which PHARE — aid for economic restructuring in the CEECs (B7-500, DGIA) 150,7 3,5 16,7 29,3 25,2 31,0 27,0 6,0 12,0 TACIS — technical cooperation with the NIS (B7-520, DGIA) Other budget headings of which Training and exchange of nuclear-safety experts in the CEECs and NIS; introduction of a system of accounting for fissile materials in Russia (B4-2001, DG XI) Cooperation with the Soviet Union and, subsequently, the CEECs and NIS (as of 1993) in the field of nuclear safety (B6-8201, DGXII) Cooperation with the CEECs and NIS in the field of nuclear safety (B/534, DGIA) Community contribution Nuclear Safety Account DGIA) to (NSA) the EBRD’s (B7-630, 635,4 62,4 6,9 28,0 7,5 20,0 56,9 80,0 88,0 88,0 106,0 126,5 (cid:77) 90,0 3,0 7,0 8,0 32,0 5,4 7,0 1,0 1,0 1,8 3,1 3,0 7,0 7,0 11,0 (cid:239)(cid:78) 3,6 3,9 20,0 Source: Commission Decisions concerning nuclear safety under the PHARE and TACIS programmes (where there is no specific budget heading) and commitment appropriations in the case of other budget headings. Grand total 848,5 3,5 76,6 116,3 121,2 151,0 138,4 139,5 102,0 (cid:239) (cid:239) (cid:239) (cid:239) (cid:239) (cid:239) (cid:239) (cid:239) (cid:239) (cid:239) (cid:239) (cid:239) (cid:239) 9. 2. 1999 EN Official Journal of the European Communities C 35/29 Breakdown by recipient and source of finance of funds received and committed from the international community (million ECU) Table 1. 2 Recipients Russian Federation Ukraine Regional or not allocated Bulgaria Lithuania Slovakia Czech Republic Hungary Armenia Romania Belarus Kazakhstan Slovenia Poland Latvia Estonia Uzbekistan Kirgizstan Moldovia, Georgia, Azerbaidjan % n a e p o r u E n o i n U 243,6 213,9 16,1 51,1 9,2 27,5 24,4 22,2 11,2 1,4 2,4 5,1 2,5 1,0 1,0 0,9 0,4 0,4 0,0 r e h t O f o s e c r u o s e c n a n i f 301,5 124,2 202,6 60,8 82,1 17,4 17,1 14,2 6,3 9,5 4,9 1,9 0,7 1,5 0,5 0,4 0,4 0,2 0,6 l a t o T 545,1 338,0 218,7 111,8 91,3 44,9 41,5 36,4 17,5 10,9 7,3 6,9 3,2 2,5 1,5 1,3 0,8 0,6 0,6 % 37 23 15 8 6 3 3 2 1,2 0,7 0,5 0,5 0,2 0,2 0,1 0,1 0,1 0,0 0,0 Total 634,4 846,4 1 480,2 100 43 57 100 Source: NUSAC — updated data as at 31 December 1997. NB: Reconciliation of the Commission’s accounting commitments (ECU 786,1 million) for PHARE and TACIS programmes alone and those recorded by NUSAC (ECU 634,4 million) reveals the highly approximate nature of NUSAC’s database. Sources of finance European Union Nuclear Safety Account United States’ bilateral aid European bilateral aid Japanese bilateral aid IAEA Canadian bilateral aid Miscellaneous l a t o T 634,4 257,4 219,5 206,2 103,8 27,9 19,1 11,9 Total 1 480,2 (million ECU) % 43 17 15 14 7 2 1 1 100 C 35/30 EN Official Journal of the European Communities 9. 2. 1999 Financing agreements under the NSA concluded by the EBRD as at 31 December 1997 Table 1. 3 Financing agreements Implementation as at 31 December 1997 Date of conclusion Amount Contracts concluded Balance to be contracted Payments made Outstanding balance payable (million ECU) Bulgaria Kozloduy 1-4 Lithuania Ignalina 1-2 June 1993 February 1994 Ignalina safety analysis April 1994 Russian Federation Sosnovy Bor 1-4 Kola 1-2 Novovoronesh 3-4 Gozatomnadzor (GAN) June 1995 Ukraine Chernobyl 1-3 Source: EBRD. November 1996 Total for financing agreements 24,0 24,0 43,1 34,8 8,3 76,4 30,4 21,9 23,3 0,9 118,0 118,0 261,5 23,5 23,5 41,2 33,3 7,9 29,1 21,3 4,0 2,9 0,9 9,8 9,8 103,6 0,5 0,5 1,9 1,5 0,4 47,3 9,1 17,9 20,4 — 108,2 108,2 157,9 22,1 22,1 38,1 32,1 6,0 6,5 3,9 1,2 1,0 0,4 2,8 2,8 69,5 1,9 1,9 5,0 2,7 2,3 69,9 26,5 20,7 22,3 0,5 115,2 115,2 192,0 9. 2. 1999 EN Official Journal of the European Communities C 35/31 ANNEX 2 Operations audited and visits carried out Table 2. 1 — PHARE and TACIS decisions on nuclear safety taken by the Commission since 1990 Table 2. 2 — List of the contracts audited Table 2. 3 — Supplies operations audited in connection with contracts with supply agencies Table 2. 4 — Stage reached in implementing TACIS contracts with supply agencies Table 2. 5 — Nuclear authorities and power plants visited C 35/32 EN Official Journal of the European Communities 9. 2. 1999 PHARE and TACIS decisions on nuclear safety taken by the Commission since 1990 (million ECU) Table 2. 1 U C E n o i l l i m 200 200 150 150 100 100 50 50 0 0 1990 1990 1991 1991 1992 1992 1993 1993 1994 1994 1995 1995 1996 1996 1997 1997 Programmes Betalinger Payments Betalinger Decisions Afgørelser Afgørelser Kontrakter Kontrakter Contracts Programme Title Total amount under the decision of which allocated to nuclear safety Decision Contracts Payments (million ECU) TACIS WW9103 WW9204 WW9206 WW9306 WW9406 WW9507 WW9508 WW9606 WW9608 WW9707 WW9708 WW9711 WW9715 UK9402 UK9502 UR9601 PHARE ZZ9112 ZZ9217 ZZ9317 ZZ9423 ZZ9528 ZZ9720 BG9107 BG9110 BG9202 BG9207 BG9311 BG9402 BG9407 BG9512 BG9608 CS9002 LI9101 LI9302 Energy Regional nuclear safety ISTC nuclear safety Nuclear safety Nuclear safety programme Financing proposal for ISTC Nuclear safety programme Financing proposal for ISTC Nuclear safety programme ISTC 1997 USTC Nuclear safeguards Nuclear safety 1997 Energy sector 1994 Energy sector Chernobyl Action plan energy in Ukraine Nuclear safety Nuclear safety improvement Nuclear safety Regional nuclear safety Regional nuclear safety Nuclear safety 1997 Energy Safety nuclear power plants Nuclear safety Energy emergency winter Nuclear safety Cross-border cooperation Nuclear safety Nuclear safety Nuclear safety Environment programme Agriculture/energy Lithuania General technical assistance facility Total 702,5 115 60 20 88 67,5 10 58,5 15 80 17 3 2 68 23,5 37,5 37,5 240,6 3,5 20 20 20 20 12 10 11,5 8,3 10 3,8 25 5 7 6 30 6 22,5 943,1 635,4 56,9 60 20 88 67,5 10 58,5 15 80 17 3 2 68 20,5 37,5 31,5 150,7 3,5 20 20 20 20 12 1,2 11,5 8,3 1 3,8 6 5 7 6 3,5 0,5 1,4 786,1 496 56,7 59,6 20,0 84,2 64,7 10 47,6 14,5 49,3 17 19,87 37,12 15,46 114,3 3,5 19,7 19,8 19,9 12,1 1,2 11,4 8,1 1 3,1 0,6 4,8 3,5 0,7 3,4 0,5 0,9 610,3 238,3 48,6 51,0 20,0 49,3 23,5 9,6 10,6 2,1 2,1 1,9 13,23 4,93 1,51 68,2 3,5 15,4 12 3 1,2 1,2 11,4 8,1 1 2,7 0,3 2,3 1,4 3,3 0,5 0,9 306,51 Source: Commission’s decisions and revenue and expenditure account (De´sire´e) as at 31 December 1997. 9. 2. 1999 EN Official Journal of the European Communities C 35/33 Table 2. 2 List of contracts audited (million ECU) Decision Project Contract Contractor Recipient countries Power plants involved Amount % 25 TACIS On-site technical assistance WW9204 WW9204 WW9406 WW9204 WW9204 WW9406 WW9204 WW9204 WW9406 WW9204 WW9204 WW9406 WW9204 WW9306 01. 01 01. 01 01. 01 01. 01 01. 01 01. 01 01. 01 01. 01 01. 01 01. 01 01. 01 01. 01 01. 01 02. 01 93-0958 94-1263 95-0964 93-0533 94-0120 95-1211 93-0411 94-0491 95-0933 93-0412 94-0116 95-2151 93-0410 94-0547 Nuclear Electric (=Magnox) Nuclear Electric (=Magnox) Nuclear Electric (=Magnox) EDF EDF Kernkraftwerke (KKE) RWE-Biblis RWE-Biblis RWE-Biblis Tractebel Tractebel Tractebel EDF EDF Assistance to safety authorities WW9204 WW9306 03. 01 03. 01 94-1342 96-5287 Risk audit Risk audit Other safety studies and analyses WW9103 WW9306 WW9306 WW9306 WW9103 UK9402 03. 01 02. 02 02. 02 01. 02 03. 01 03. 01 Direct supply contracts WW9406 WW9204 WW9306 01. 04 02. 01 01. 02 93-0504 95-0775 95-0774 95-0190 93-0972 95-1295 96-5580 94-1281 95-0242 EDF (training centre) EDF (training) Tecnatom (training centre) Siemens (RVE study) EDF Nukem Corys (simulators) Sema Group (SPDS prototype) Contracts with supply agencies WW9306 WW9204 WW9306 WW9306 WW9508 02. 01 01. 01 02. 01 01. 01 01. 01 94-1351 94-0046 94-1165 94-1355 96-5455 Fichtner Crown Agents Crown Agents Italtrend Italtrend Other technical assitance to the Commission WW9204 WW9306 04. 01 02. 06 93-0895 95-2329 TPEG TPEG International Science and Technology Centre Russia Russia Russia Zaporozhe Russia Russia Russia Russia Russia Russia Russia Ukraine Ukraine Russia Russia Russia Ukraine Ukraine Phare/Tacis Ukraine Sosnovy Bor Sosnovy Bor Sosnovy Bor Kola Kola Kola Balakovo Balakovo Balakovo Kalinin Kalinin Kalinin Rovno Rovno General General General General General RBMK VVER 230 VVER 320 Russia Kola Phare/Tacis VVER 230/213 Russia Kalinin Ukraine Tacis Tacis Tacis Tacis Phare/Tacis Phare/Tacis General General General General General General General AEA-T (safety assessment) Russia WW9206 01. 01 95-1265 ISTC Russia General 161,88 22,11 0,27 0,94 1,32 0,40 2,26 1,81 0,14 0,95 2,19 0,50 1,95 4,58 0,58 4,22 3,58 3,09 0,49 23,54 5,40 1,20 1,10 2,98 4,67 8,18 6,39 0,28 4,12 1,99 83,62 24,67 12,05 3,96 28,44 14,50 10,43 4,36 6,07 12,22 12,22 C 35/34 EN Official Journal of the European Communities 9. 2. 1999 (million ECU) Decision Project Contract Contractor Recipient countries Power plants involved Amount % PHARE On-site technical assistance BG9202 BG9311 BG9407 05. 01 02. 01 02. 01 x x 95-0838 EDF EDF EDF Assistance to safety authorities Bulgaria Bulgaria Bulgaria Kozloduy Kozloduy Kozloduy ZZ9217 01. 01 94-0028 ANPA Lithuania Ignalina Other measures LI9101 LI9302 LI9302 02. 01 09. 05 09. 05 93-0195 93-0189 94-0359 Corys (simulator) Corys (simulator) Corys (simulator) Technical assistance to the Commission BG9202 BG9311 BG9407 07. 01 01. 01 04. 01 x x Nuclear Electric (PIU) Nuclear Electric (PIU) 96-0445 DTN (PIU) Total 43 Source: DG IA’s revenue and expenditure account (De´sire´e). Lithuania Lithuania Lithuania Bulgaria Bulgaria Bulgaria Ignalina Ignalina Ignalina Kozloduy Kozloduy Kozloduy 11,97 8 7,83 3,84 2,00 1,99 0,79 0,79 1,17 0,49 0,37 0,31 2,18 1,00 0,63 0,54 173,86 22 9. 2. 1999 EN Official Journal of the European Communities C 35/35 Supplies operations audited in connection with contracts with supply agencies Table 2. 3 Description of the projects and contracts with the supply agencies concerned Project Contractor Power plant involved (million ECU) Budget (contract not signed) Contract (contract signed) Fichtner WW9306 02. 01 94-1351 5 5 Computer information system U1. 01/94A Syseca Spare parts Spare parts Spare parts R1. 02/92D Siemens R1. 02/92D Bopp & Reuther Balakovo U1. 03/93A Limitorque Rovno Balakovo Zaporozhe Zaporozhe Fire protection equipment U1. 03/94A SVT Crown Agents WW9204 WW9306 01. 01 02. 01 94-0046 94-1165 7 7 Water chemistry Laboratory analysis Laboratory analysis R1. 03/92A CITA R1. 03/92A Millipore R1. 03/92A Maihak Kalinin Kalinin Kalinin All station computer network R1. 04/92A Marex Sosnovy Bor Condenser cleaning R1. 02/92A Taprogge Repair of floor coating (fire risk) U1. 01/92A GEHOLIT Balakovo Rovno Equipment for SG control U1. 01/93A intercontrole Rovno Italtrend WW9306 01. 01 94-1355 Water chemistry (secondary side) Capillary electrophoresis analyser 26 21 R1. 03/94A1 CITA R1. 03/94A2 Primary circuit water quality R1. 03/94B Automated system for maintenance Safety valves Diagnosis system Thermal H2 recombiner R1. 03/94E R1. 03/94G R1. 03/94H R1. 03/94J Water chemistry (sides 1 & 2) R1. 02/94A Balduf Safety relevant spare parts Safety valves R1. 02/94C R1. 02/94E Equipment for fire fighting R1. 02/94G Bosch Accumulator cells R1. 02/94X VARTA Reactor control system Reliable power supply Safety valves Leak detection system Equipment for diagnostic system R1. 01/94A R1. 01/94B R1. 01/94C R1. 01/94D R1. 01/94F Liquid waste removal system R1. 01/94G Incineration facility Solidification facility R4. 03/94 R1. 04/93D Emergency fire alarm system R1. 04/93F Kalinin Kalinin Kalinin Kalinin Kalinin Kalinin Kalinin Balakovo Balakovo Balakovo Balakovo Balakovo Kola Kola Kola Kola Kola Kola Kola Sosnovy Bor Sosnovy Bor — — — — — — — — — — — — — — 23,13 16,68 — 0,18 0,50 0,75 0,65 0,70 0,70 — 0,50 1,00 — — 2,00 0,50 2,00 1,00 1,00 1,50 0,20 3,00 0,50 8,50 8,50 4,99 0,04 0,28 0,25 2,95 5,05 5,05 0,31 0,06 0,04 2,99 1,65 0,96 1,48 1,24 1,24 0,32 — — — — — — 0,46 — — 0,03 0,44 — — — — — — — — — C 35/36 EN Official Journal of the European Communities 9. 2. 1999 (million ECU) Description of the projects and contracts with the supply agencies concerned Project Contractor Power plant involved Budget (contract not signed) Contract (contract signed) WW9508 01. 01 96-5455 2 Automated system for maintenance R1. 03/95A Safety panel display system R1. 03/95D Not allocated contract to a specific 3 Completion of maintenance project Waste treatment systems Upgrading of control room panels R1. 03/96C R1. 01/96C R1. 04/96A Kalinin Kalinin Kalinin Kola Sosnovy Bor 1,75 0,75 1,00 4,70 0,50 1,20 3,00 — — — — — — — Total for the operations audited 38 Source: Reports from the supply agencies and on-site assitants. 23,13 14,79 9. 2. 1999 EN Official Journal of the European Communities C 35/37 Stage reached in implementing TACIS contracts with supply agencies Table 2. 4 Implementation by the Commission Implementation by the agency Contracts Payments (million ECU) e r u d e c o r P IC RT DA DA DA RT RT t c a r t n o C Italtrend 94-1355 96-5455 97-0518 97-0586 97-0779 GTZ 97-0573 97-0577 Fichtner 94-0013 OT 94-1351 IC Crown Agent 94-0046 OT 94-1165 96-5449 Europa (1) 97-0585 97-0561 IC RT DA IC d n a n o i s s i m m o C l a u t c a r t n o c r e h t o s e e f a s a s e e f n o i s s i m m o C d e t a m i t s e f o % s e s a h c r u p 1,54 0,80 0,48 0,03 0,20 0,03 0,73 0,19 0,54 1,01 0,23 0,78 0,92 0,45 0,26 0,21 0,27 0,18 0,09 4,48 2,8 2,6 2,9 2,8 3,3 1,5 3,5 1,9 1,9 1,9 3,6 5,2 3,3 3,7 3,9 7,0 2,3 2,2 2,2 2,2 2,8 t r a t S d n E 12. 94 12. 96 12. 97 11. 97 01. 98 12. 99 12. 98 12. 99 10. 00 02. 00 11. 97 11. 97 11. 00 11. 00 02. 94 12. 94 09. 95 06. 98 01. 94 12. 94 12. 96 01. 97 01. 98 12. 98 11. 97 10. 97 11. 00 10. 00 Grand total % % e h t m o r f s e c n a v d A d n u f l a i c e p s d e d u l c n o c s t a r t n o C s t n e m y a P e d a m d e v i e c e r t s e r e t n I e c n a l a b h s a C e h t n i d n u f l a i c e p s 11,00 11,00 1,47 1,47 1,09 1,09 1,19 1,19 11,10 11,10 16,95 26,58 12,81 0,25 4,46 12,49 15,00 10,00 4,31 22,27 16,52 15,30 4,31 8,50 10,42 10,42 0,25 0,72 0,72 5,00 1,22 4,39 0,15 4,24 5,30 0,30 5,00 s e s a h c r u p d e t a m i t s E ) d n u f l a i c e p s ( 59,25 27,64 16,82 0,82 13,00 0,97 38,50 10,00 28,50 28,34 4,46 23,88 24,60 11,60 3,70 9,30 n i d e r e t n e t n u o m A s t n u o c c a e h t 60,79 28,44 17,30 0,85 13,20 1,00 39,23 10,19 29,04 29,36 4,69 24,67 25,52 12,05 3,96 9,51 d n a n o s e c n a v d A f o s t n e m y a p s e e f n o i s s i m m o c 0,44 0,30 0,14 0,77 0,17 0,60 0,73 0,41 0,25 0,07 11,92 12,19 7,92 4,00 8,10 4,09 162,62 167,09 1,94 42,95 44,56 24,32 2,16 20,79 100 26 100 27 104 15 57 5 48 (1) Subsidiary of Crown Agents. Source: DG IA’s revenue and expenditure account (De´sire´e) and supply agencies’ reports. C 35/38 EN Official Journal of the European Communities 9. 2. 1999 Table 2. 5 Nuclear authorities and power plants visited Country Russia Ukraine Bulgaria Authorities Gozatomnadzor safety authority (GAN) Ministry for Atomic Energy (Minatom) The operator Rosenergoatom (REA) MOHT (important sub-contractor) Ministry of the Environment Ministry responsible for Chernobyl Nuclear Regulatory Administration (NRA) The operator Goskomatom Energoproekt (Ukranian Engineering Institute) Ministry of Energy and Energy Resources (MEER) The Operator National Electric Company (NEK) Bulgarian Nuclear Safety Authority (BNSA) Energoproekt (Bulgarian Engineering Institute) Lithuania Safety authority (VATESI) Ministry of Energy Groupings of companies and internal organisations TPEG in Brussels (Twinning Programme Engineering Group) Riskaudit in Paris OECD/NEA in Paris (Atomic Energy Agency) WANO/PC in Paris (World Association of Nuclear Operators, Paris Centre) ISTC in Moscow (Institute for Scientific and Technical Cooperation) AIEA in Vienna (International Atomic Energy Agency) Power plants Sosnovy Bor Kola Kalinin Balakovo Rovno Zaporozhe Kozloduy Ignalina 9. 2. 1999 EN Official Journal of the European Communities C 35/39 THE COMMISSION’S REPLY GENERAL REMARKS The draft Special Report is a well-researched document that makes a number of pertinent criticisms. In many cases the Commission has already taken corrective measures. In other cases, the issues highlighted by the Court will be addressed in the Commission’s proposals for a new Tacis Regulation and for the updating of the Financial Regulation. However, in a number of cases identified below, the Commission does not agree with the Court’s remarks. The Phare and Tacis nuclear safety programmes have been implemented in a context, that, as the Court acknowledges, is particularly complex. Therefore, without denying the need to improve its assistance, the Commission takes satisfaction in the progress that it has achieved, notably in developing with the programme partners a climate of trust and cooperation, in raising their awareness and know-how concerning nuclear safety issues, and in strengthening the National Nuclear Regulatory Authorities of the partner countries. Safety culture is no longer unknown but still needs further strengthening. Strategy In the NIS there are at present 29 nuclear reactors in operation in Russia, 14 in Ukraine, one in Armenia, and one in Kazakhstan. In the central and eastern European countries there are 20 Soviet-designed units: six in Bulgaria, four in Hungary, four in the Czech Republic, four in Slovakia, and two in Lithuania. Not all of these are of a type that can be upgraded to western safety levels. The cost of upgrading those reactors that are deemed to be upgradeable is high, perhaps ECU 100-200 million per unit, and dwarfs the Tacis allocations to the nuclear safety sector. The strategy pursued by Commission through the Nuclear Safety programmes takes this situation into account. In particular, for those partner countries that are not candidates for EU accession the Commission seeks to support and accelerate domestic safety upgrading programmes, principally through an extensive programme of on-site assistance, which includes equipment supplies but also aims at instilling a ‘safety culture’ among the programme partners, and through the promotion of independent nuclear regulatory authorities. The reasoning in the special report is flawed. The report claims that the objective of external aid in the field of nuclear safety — including the aid given by the Phare and Tacis programmes — was to bring the stock of Soviet-designed reactors up to a level of safety in line with international standards. However, the donors have never accepted this responsibility and their objective has always been confined to helping the recipients to meet their own responsibilities in the field. Furthermore, the Commission was never going to be able to provide the ECU 50 billion to 60 billion required to close down or modernise the 65 nuclear reactors in eastern Europe and the former Soviet Union with ‘donations’ of around ECU 100 million a year, essentially in the form of technical assistance (since the Phare and Tacis rules strictly limit investment funding). This is not to say, however, that the Commission does not endeavour to improve its strategic approach or to adapt it in the light of political developments. In Agenda 2000, for example, the Commission clearly defined its approach to nuclear safety in the context of EU enlargement. Where the safety of Soviet-designed nuclear power stations, which are in operation or under construction, can be upgraded to meet international safety standards, modernisation programmes should be fully implemented over a period of seven to ten years. (This applies to Dukovany and Temelin in the Czech Republic, Paks in Hungary, and certain units at Bohunice C 35/40 EN Official Journal of the European Communities 9. 2. 1999 and Mochovce in Slovakia and at Kozloduy in Bulgaria. ) The timetables agreed by the governments concerned, subject to certain conditions, for the closure of non-upgradeable units must be respected. (This applies to Bohunice in Slovakia, Ignalina in Lithuania and certain units at Kozloduy in Bulgaria. ) (1) New orientations for the Phare and Tacis programmes are also outlined in the Communication from the Commission to the Council and the European Parliament on nuclear sector related activities for the applicant countries of central and eastern Europe and the new independent States. Finally, a panel of high level advisers was established at the beginning of 1998 to make further recommendations regarding the Commission’s activities in this sector. Its report, Nuclear Safety in Central and Eastern Europe and in the New Independent States, A Strategic View for the Future of the European Union’s Phare and Tacis Programmes, has recently been published. The Commission will examine the recommendations and assess to what extent they can be included in its future activities in this field. Programming The Commission accepts that there have been shortcomings in the manner in which its strategy has been translated into concrete projects. These shortcomings in the programming process can be attributed largely to the urgency with which the initial programmes were launched, the differences of perception between eastern and western experts, and the inadequate staff resources that were allocated for the implementation of the programmes (point 2. 4). This has led the Commission to rely extensively on external consultants to draw up the nuclear safety programmes and their component projects. However, the Commission fully agrees with the Court in that there is a need for more suitable arrangements. Therefore the Commission undertook to circumscribe the role of consultants such as the Twinning Programme Engineering Group, and Directorate-General IA has established a Framework Agreement with the Joint Research Centre in order to avail itself in-house of the requisite technical support. Nevertheless, it is clear that the Joint Research Centre cannot cover all the needs for nuclear expertise that arise in the course of implementation of the programme. Implementation The Commission acknowledges that the programmes have suffered from delays and management deficiencies, and it has adopted a number of measures to redress this state of affairs: — reduction of the number of projects selected for financing, — cancellation of projects whose launch is unduly delayed, — commitment of funds only once projects have been sufficiently developed to permit a rapid launch after the financing decision, — establishment of better lines of communication with the beneficiaries, for example through the Moscow-based Joint Management Unit. It should be noted that, given the typical duration of the project cycle, it will take some years before the full benefit of these measures is reaped. The high rate of staff turnover in the Commission departments concerned remains worrying. Finally, the Commission acknowledges that its general procedures are not always well adapted to the specific constraints of the nuclear safety programmes, and that they have contributed to delays in their implementation. However, it would stress that these procedures have, in some cases, been imposed on the Commission by the Council. (1) Agenda 2000, Chapter 6, p. 53. 9. 2. 1999 EN Official Journal of the European Communities C 35/41 1. INTRODUCTION Phare and Tacis nuclear safety programmes In the context summarised by the Court, the 1. 1. - 1. 2. European Commission was mandated by the Council to take action to improve nuclear safety both for the countries of central and eastern Europe and for the former Soviet Union. This mandate was a real challenge because the constraints in this sector were much greater than for all the other activities financed by the Phare and Tacis programmes. There are four such constraints: 1. The technical constraint was greater than for any other activity, not only because of the very complex scientific and technical content of this sector, but also because of the restricted information available in Europe at the start of the 1990s on the Soviet nuclear sector, which was very secretive and closely linked to the military. In order to overcome this constraint, the Commission turned to operators in this sector in Europe (power station operators, industrialists, safety authorities) to acquire the necessary knowledge and attempt to define a strategy. This collaboration has reached a level of dependency that is criticised by the Court. 2. The political constraint was also greater than for other sectors. The principle of demand-driven programmes adopted by the Council regulations for both Phare and Tacis was much more binding in the nuclear sector for two reasons. This sector is dominated by very powerful bodies, sometimes by virtual states within a state, or by power station directors who have a very great influence on whole regions because of a lack of any alternative energy sources (as was the case at Chernobyl). As a rule, these powers refuse any debate on their strategy and reject as ‘exaggerated’. conception of the western safety While the Commission has gradually overcome this constraint in applicant countries such as Bulgaria or Lithuania, bringing pressure to bear within the a context of pre-accession strategy, the situation remains more difficult its own conditions for potential cooperation in a sector which generally does not recognise the need for it. in Russia, which enlargement by implementing imposing is 3. The financial constraint was also more sensitive in the sense that improving the safety of a nuclear stock made up of around fifty power stations required budgets out of all proportion with the Phare and Tacis programme funds. This constraint is particularly tough and prevents the Commission from applying any real leverage to the process of solving the problems, in particular by closing power stations. 4. The legal constraint was also greater in the sense that the Phare and Tacis regulations imposed the same rules for invitations to tender in the nuclear sector as in somewhat inappropriate in view of how few, and what type, of operators were the Commission was thus asked to make the Member States’ safety authorities compete with each other. sectors, which was the other competent field: this in The Commission has overcome this constraint by a broad use of the derogations permitted by the Financial Regulation for concluding contracts by private treaty; the Court criticises the scale of this practice. 2. SUMMARY OF THE OBSERVATIONS The European Union’s approach 2. 1. The strategy which has been the basis for defining the Commission’s programmes was first that adopted by the G7 in 1992 at the Munich Summit. The action programme adopted by the G7 was based on the following measures: — improvements in operational safety, — technical improvements based on safety assessments, — strengthening the safety authorities. This action plan also had a longer-term goal of replacing the least safe reactors and improving those of more recent design. The Commission’s strategy was reiterated in the initial the countries concerned, funding agreements with formulated more explicitly in 1995 and adopted by the management committee in 1996. The main thrust of this strategy for the applicant countries was clearly defined in Agenda 2000. As regards decommissioning, dismantling and waste processing, these were not secondary objectives but rather objectives which have thus far not received the same level of funding as the safety of working reactors. The report also stresses how difficult it is for the countries concerned to envisage closing their nuclear reactors. However, it should be stressed that: — on the one hand, it is the Tacis programme which prepared the plan for decommissioning the Chernobyl nuclear reactors, and it was almost entirely Tacis funds which financed the investigation of the case for C 35/42 EN Official Journal of the European Communities 9. 2. 1999 the completion of funding Khmelnitsky 2 Chernobyl to be definitively closed, reactors, which the Rovno 4 and should allow — on the other hand, a clear strategy was set out in Agenda 2000 to lead to the least safe reactors in the applicant countries being closed. The fact noted by the Court, that the financial instruments which could take over from Phare and Tacis for the costliest projects are taking a long time to be mobilised, shows the technical, economic and financial complexity of projects in the nuclear sector. 2. 2. When setting up G-24 NUSAC, the mechanism was primarily a focus point for information exchange, enabling the various actors to coordinate amongst themselves. The participating parties never considered giving NUSAC a mandate to direct funds. Finally, it needs to be stated that G-24 NUSAC enjoys excellent relations with the IAEA and EBRD, with which there is frequent contact. Cooperation with the NSA to buy certain equipment was difficult because of the different procedures that exist, particularly as regards the firms that are eligible to take part in the invitations to tender. 2. 3. Relations with the beneficiaries in the partner countries have been governed by rules which normally apply to the beneficiaries of the Tacis programme. They have been associated with all the programming and evaluations received in connection with invitations to tender. the complain recipients sometimes While of communication problems, this can be because they challenge the results of the evaluations of the invitations to tender. The recipients normally participate in the evaluations. In some cases the recipient may not have been asked to travel for the evaluation of the price bids, since this evaluation was confined to choosing the lowest bid. Management of the operations 2. 4. The Commission notes that its replies show that while there has occasionally been a lack of rigour (often due to constraints on human resources, which are too variable and too limited for the large number of projects) this is certainly not the case across the board. More efficient management tools were put in place after the start of the programme. 2. 5. The complex and specific nature of the field of action, nuclear safety, meant that private treaty contracts were used more than in other fields. Derogations from the competitive bidding procedures mainly concerned projects to assist the safety authorities and the contracts with the Union electricians for on-site assistance. 2. 6. It was decided to interpose supply agencies in order to increase the transparency of the process of purchasing equipment, to balance out the very great involvement of the Union’s electricians. As regards advances, the Commission would draw attention to the fact that it must choose between a few large advances (which are covered by bank guarantee) or many small advances. In the light of the staff constraints highlighted by the Court, the second choice is not really an option for the Commission departments. 2. 7. The shortcomings in the programming process can be attributed largely to the urgency with which the initial programmes were launched and the inadequate staff resources that were allocated for the implementation of the programmes (paragraph 2. 4). This has led the Commission to involve external consultants to draw up the nuclear safety programmes and their component projects. However, the Commission has meanwhile put in place more suitable arrangements. The role of consultants such as the Twinning Programme Engineering Group (TPEG) and carefully Directorate-General IA has established a Framework Agreement with the Joint Research Centre in order to avail itself in-house of the requisite technical support. circumscribed been has The fact remains that the nuclear sector is so complex that the Commission, and in particular its Joint Research Centre, cannot claim to have sufficient resources to meet all its needs in programming and drawing up terms of reference. Finally, it should be noted that the use of consortia is also linked to the limited number of players in the nuclear sector. 2. 8. The levels set by the budgetary authority have not been exceeded. The management expenditure mentioned by the Court as excessive expenditure does not come under the ceiling entered in the budget remarks. Mobilisation of aid and the results 2. 9. The Commission does not deny the implementation of some actions has been slow. The choice of implementing arrangements has been dictated above all by a concern for transparency and control. It is for this reason above all that supply agencies have been selected for equipment purchasing projects. that 9. 2. 1999 EN Official Journal of the European Communities C 35/43 As regards the priority given to supplying equipment, the point should be made that there is no contradiction between supplying equipment and the development of a safety culture. Equipment supply projects must largely serve to implement appropriate procedures, reflecting an acceptable safety culture. It is this same approach which led the Commission to spread the budgets across many power stations. 2. 10. As the requirements in any case exceeded the available resources, the choice of the best projects had to be based on several criteria. For these projects, the active participation of the partners could be considered as a positive sign for its implementation. Changes had to be made following problems such as: excessive delays in preparing the specifications (Nikiet technical centre), underestimation of budgets, stricter criteria imposed late by the safety authorities, a change of direction by the authorities in the recipient country (abandonment of an investment project with a Euratom loan at the Kola power station at the end of the preparatory phase financed by Tacis). from them. For some of these projects, the results have also been used in subsequent related projects. The terms between contractors and sub-contractors are not the direct responsibility of the Commission. 2. 13. The contracts are correctly accounted for and not overestimated. However, the amounts entered in the accounts for supply contracts should not be used as an indicator of progress on purchases. For Chernobyl, the low rate of mobilisation can be explained above all by the link established between the in 1994) and the political Tacis projects (decided negotiation between the G7 and the EBRD with Ukraine for the MoU and the NSA agreement which were completed only in 1995 and 1996 respectively. Before then, it would not have been appropriate to unilaterally start implementing projects on decommissioning the power station. 3. THE EUROPEAN UNION’S APPROACH Objectives and resources 2. 11. In certain cases, the Commission received a formal declaration from the recipients that they had obtained the agreement of the safety authorities for the necessary licences. It subsequently transpired that this had not been the case. 3. 2. The strategy which has been the basis for defining the Commission’s programmes was first that adopted by the G7 in 1992 at the Munich Summit. The action programme adopted by the G7 was based on the following measures: The Court’s comments in paragraph 2. 3 on relations with the recipients should be read in this light. — technical improvements based on safety assessments, — improvements in operational safety, 2. 12. Because of the lack of appropriate cover for the EU’s contractors in the event of a nuclear accident, the results of the contracts Memorandum of Understanding (MoU) was signed in 1995 could not be made freely available to the recipients. signed before certain Under the MoU protection is provided by the Russian Federation, thereby obviating the need for this restriction for the contracts signed subsequently. An interim solution has been found for the contracts that were concluded before the Memorandum was signed, and the results of the projects in question have been made formally available to the recipients. — strengthening the safety authorities. This action plan also had the longer-term goal of replacing the least safe reactors and improving those of a more recent design. Reference to this strategy was clearly made in the proposals and agreements on first programmes adopted (nuclear safety programmes for the Russian Federation and Ukraine 1992 — 93). funding the strategy was more The Commission’s explicitly formulated in 1995 and adopted by the management committee in 1996. The main priorities of this strategy have been pursued since the beginning of the programme. Finally, the strategy for the central and eastern European countries was clearly defined in Agenda 2000. It should also be noted that, from the start, the Russian institutes have closely collaborated in drawing up the studies concerned and have therefore gained direct use It should be borne in mind that the characteristics and technical deficiencies of the Soviet-designed reactors were relatively unknown at the beginning of the programmes. It was therefore necessary to address the problem by C 35/44 EN Official Journal of the European Communities 9. 2. 1999 conducting studies. These also made it possible to establish links between European industrialists and their counterparts, particularly in Russia. Subsequently, more concrete action was taken. It was backed up by two additional elements: support for the regulators (safety authorities) and station operators. the power support for It is therefore not true to say that the programmes between 1990 and 1994 were decided upon without an overall strategy. 3. 3. The Commission placed the question of closing the least safe reactors within the more general framework of the G7 and the Nuclear Safety Account (NSA), judging that only concerted action by all the donor countries could lead to a positive result. Under the NSA there does indeed exist an agreement with Lithuania, Bulgaria and Russia. The case of Ukraine is covered by the G7 MoU. 3. 4. All the strategy documents which were used for programming clearly indicate that the Commission’s action may not contribute to extending the lifespan of the reactors planned for closure in the short term. This is looked at when the annual programmes are assessed. Decommissioning and dismantling of reactors 3. 5. to 3. 7. The Commission has always considered decommissioning the least safe power stations as a paramount political objective. This is clearly confirmed in Agenda 2000, and is demonstrated by the Commission’s actions in Ukraine and in the context of the accession partnerships and its support, both technical and political, for the NSA’s and the G7’s efforts. It should also be noted that, when the context allowed, the necessary resources were allocated to deal with this question. The Tacis the decommissioning plan for the Chernobyl power station. Invitations to tender for the construction of three waste processing plants the for waste decommissioning of Chernobyl, to be financed by the Tacis programme (ECU 40 million), are in preparation. programme prepared resulting from The multilateral account set up in 1997 with the EBRD does not affect the decommissioning of the Chernobyl reactors but the sarcophagus surrounding Unit 4, where the 1986 accident took place. As regards the closure of Chernobyl it is important to stress the link with completion of two new reactors. The difficulties encountered in mobilising appropriations for this action do not come from the Commission, but from other institutions, particularly the EBRD. Supply of equipment 3. 8. Given the very considerable amounts required to modernise the reactors in relation to the limited resources which the Commission has at its disposal, it considers that the first purpose in supplying equipment is to transfer the safety culture, basing it on practical examples which involve the recipients directly, rather than on studies alone. In view of the state of the power stations concerned and the perceived needs, it would have been impossible to ensure that the recipients cooperated if the Commission had arrived empty-handed. It should also be mentioned that it has been possible to deal with urgent problems, particularly in Ukraine, where significant quantities of spare parts have been supplied to the nuclear power stations at Rovno, southern Ukraine and Zaporozhe. The supply of equipment was also a response to a repeated criticism that the programmes contained too many studies with no real impact on the safety of power stations. The actions that have already been concluded have brought real improvements to the power stations concerned. For example, the supply of non-destructive control equipment (Balakovo, Smolensk), treatment of water chemistry fire prevention (Zaporozhe) or computerised maintenance systems (Beloyarsk, Smolensk). (Kalinin), welding (Kalinin), In this context, it should be stressed that there is still a need for studies in all circumstances. The Commission has tried to find a better balance between studies and equipment. Lastly, the investigation of the case for financing the Rovno 4 and Khmelnitsky 2 reactors which would enable Chernobyl to be definitively closed down was financed almost entirely out of Tacis funds. Furthermore, the abovementioned projects have been scrutinised in detail by various international bodies, and the quality of the results has never been called into question. 3. 9. The Commission had proposed cooperation as one of the (secondary) objectives of its strategy. This objective is not unanimously supported by the Member States. Some of them consider that this must be left to the industrial players. 9. 2. 1999 EN Official Journal of the European Communities C 35/45 Furthermore, a proactive policy in this field in many cases requires derogations from the rules on competitive tendering, in view of the existing industrial relations. programme has undertaken to provide this service for the plants financed by the NSA too. This question should be addressed in depth when the new regulation is being drawn up. Cooperation with the other partners Non-industrial aspects of operational safety 3. 10. The inadequate definition of on-site assistance tasks is partly due to the very nature of these activities, which must meet more short-term demands, but is also partly a direct consequence of the lack of Commission staff. Multilateral coordination Coordination of G-24 (NUSAC) assistance 3. 12. The NUSAC had no decision-making power; its role was one of information exchange. Cooperation with equipment the EBRD (NSA) in supplying 3. 13. Discussions have the Commission and the EBRD in order to put together a common project for the delivery and installation of the safety relief valves for the Steam Generator main lines. taken place between The criteria for eligibility of potential suppliers and origin of goods, the requirements for the tender implementation process and the evaluation of the received tenders were compared. Regrettably, it became clear that it was impossible to reconcile the differences without creating undue delays. 3. 16. The Commission actively participates in IAEA meetings and presents there. The categorisation of the failings of Soviet-designed reactors drawn up by the IAEA in the programming (choice of projects). is therefore used its programmes 3. 18. The on-site assistance arrangements implemented by the Commission has drawn upon the programme of the World Association of Nuclear Operators (WANO). The same actors are broadly involved. 3. 19. The Court’s observation that payments to ISTC were blocked in 1997 is correct. This was due to a lack of a legal base at that time. The payments were suspended pending the signature of the Bilateral Financial Agreements between DG IA and the ISTC. These agreements were signed, with a delay attributable to staff rotation, on 15 September 1997 and since then there have been no delays in payments to the ISTC. 3. 20. The Tacis programme concentrates on the most serious safety issues, and for these the scientific basis of the solutions has already been worked out for some time. Thus the activities financed under ISTC are generally too far upstream in the R& D cycle to have a direct impact on the Tacis programme. The Commission’s strategy in research on safety was defined in the EU’s specific framework programme and under Tacis, and research projects have been very limited in number and voluntarily separated from the ISTC. It 3. 14. specify conventional framework for the supply programme. that Tacis should true is 4. MANAGEMENT OF THE OPERATIONS the Invitations to tender However, as regards the aspect of the Nuclear Safety Account (NSA) agreements on the conditions for the future cessation of certain reactors, it must be conceded that the success of these agreements is far from clear: the NSA money is being spent without the conventional consideration being obtained. This demonstrates the difficulty in imposing a strong conditionality on the subsidies given by the technical assistance programmes. example of 3. 15. An cooperation recommended by the Court concerns the granting of licences for dismantling plants in Chernobyl. The Tacis type of the 4. 1. and 4. 2. Given the specific nature of the nuclear safety projects, the operational services and the financial controller have specified the framework in which the conclusion of contracts by private treaty, authorised by the Financial Regulation, could operate. Recourse to exceptional procedures the exceptional nature of the field of intervention. justified by is entirely The same goes the Commission wanted both to call only on the operators of the Union’s nuclear power stations and also to cover a for on-site assistance where C 35/46 EN Official Journal of the European Communities 9. 2. 1999 large number of sites in the recipient countries. It was not possible to organise an invitation to tender and act within both of these constraints. instruments necessary to guarantee that this responsibility is discharged. on the depend improvements Many technical characteristics of the technology in place and can be identified only by a single contractor familiar with the technology or producing that equipment. National regulatory authorities have, for the sake of effectiveness, pooled their knowledge in one forum, with which a direct agreement form available. the sole contract then is Use of a direct agreement has not led to a lack of rigour, particularly as regards the fees. In the mutually agreed contracts, the Commission has chosen fees in line with the fees determined in invitations to tender from the same time, for experts of the same standing and in similar working conditions. In spite of repeated requests for adjustment, these initial rates have not been revised upwards, as the Commission has argued that the working conditions, having been improved in the meantime, compensate for rises in the cost of living for which the standard contracts normally provide for an adjustment. Supply agencies Appraisal of supply projects 4. 3. Without the introduction of a procurement agent, the EU utilities participating in the On-Site Assistance (OSA) programme would have responsibility for all stages of the project cycle: project definition, drafting of technical tendering, contracting and implementation. In the Commission’s view, this would not be conducive to transparency and would not allow public expenditure to be correctly monitored. specifications, 4. 4. While it is true that in 1996 the Commission published a more detailed version of the procedure applicable to purchases of equipment, the main elements of the procedure were established and brought to the attention of those concerned right from the start of this programme. throughout the purchase The recipients participate procedure, for example in the preparation of the specifications and the technical evaluation of the bids, the signature of the supply contract and the (provisional and final) acceptance of the the Commission makes the recipients responsible only for a limited number of stages in the procedure, this is partly due to the fact that it does not have the contractual equipment. While It should be noted that the procedure for evaluating tenders is divided into two parts: the financial evaluation is carried out only after the Commission has accepted the report on the technical evaluation, with the aim of ensuring the quality and objectivity of the technical evaluation before opening the price bids. It has happened that the recipients have not taken part in the financial evaluations, whenever it was the lowest bid that had to be selected, so as to avoid travel and additional costs. The entry in the accounts and the reality of the operations 4. 5. and 4. 6. Contracts concluded with supply agencies include the budget itself provided for purchases and the fees and costs for the agency. The full amount of these contracts must, of course, be entered in the accounts. Clearly, the purchases by the supply agencies are made some time after the conclusion of the parent contract, hence the divergences mentioned by the Court. Without questioning the issues raised by the Court, it should be emphasised that payments are made in accordance with the established contracts. Nonetheless, in view of the Court’s remarks, the Commission services have decided to review the financial structure of contracts. The internal database De´sire´e, to which the Court refers, the Commission’s accounting system. The is not accounting system of the Commission is Sincom, where all commitments and payments are properly registered. 4. 7. The advance payments made by the Commission in accordance with the established contracts are properly registered. (See also paragraph 4. 6. ) 4. 8. The information mentioned by the Court is indeed is required by the information additional to what accounting this receives system. The Commission management information via the procurement agents’ regular reports. (See also paragraph 4. 6. ) 4. 9. In accordance with the established contracts, the interest accruing on the amounts under the special funds has only to be credited by the contractor or the guarantor to the Commission at the end of the contract. (See also paragraph 4. 6. ) 4. 10. The Commission is making efforts, particularly in the Phare and Tacis annual reports, to give as much additional information as possible to the accounting reports, increasing the transparency of the operations. 9. 2. 1999 EN Official Journal of the European Communities C 35/47 Contractual procedures 4. 11. The contracts with the supply agencies are service contracts for which the ‘restricted invitation to tender’ is the standard procedure laid down in the Financial Regulation. As regards the eight contracts (amendments) concluded by negotiation: — the clear advantage of maintaining continuity of the services must be highlighted (cf. Article 118 of the Financial Regulation), — for several of these contracts the fees are below the ceiling for the award of negotiated contracts. some time for all the necessary consultations and to find a solution — which often is the responsibility of the partner state authorities. 4. 15. The Commission acknowledges that such an adjournment happened in certain cases in the past. However, this is no longer the case. On-the-spot monitoring of programmes It should be noted that the Joint 4. 17. and 4. 18. Management Unit (JMU) has been established to help the Russian authorities coordinate their participation in the nuclear safety programmes, particularly in drawing up these programmes, and to act as a clearing house for information. The Commission’s monitoring of the operations Cost of management 4. 13. De´sire´e is an internal database, providing a tool for contractual and financial management of projects. As such, certain aspects of the De´sire´e database could indeed be improved. formal work methodology exists and 4. 14. A is described in several documents, such as the guidelines for task managers and the handbook on project cycle management. Training on management rules is provided regularly to task managers at the Commission and Delegations. Tools for the follow-up and management of projects also exist, for example: — the monitoring provides fundamental information to the management during the life of the project, programme which — the Tableau de Bord, which is a project forecast tool, — De´sire´e, which gives detailed information of the financial life of contracts and programmes, — monthly reports from the procurement agents, — a database on projects in progress maintained by the Joint Management Unit (Moscow), in the allowed operating, the preparation, 4. 19. and 4. 20. The Commission does not agree with the Court’s statements. The respective legal bases have always preparation, implementation and other costs to be financed, without which it would not be possible to involve the partner country implementation and monitoring of the programme. The budget remark introduced in 1996 limited a clearly defined part of this assistance to a ceiling which the Commission has adhered to completely. The administrative expenditure incurred by the contractors — under service, equipment or supply contracts — in managing the activity for which they were contracted is an integral part of the programme and constitutes eligible expenditure. The Court’s statement that the expenditure entered in the accounts exceeds the limits set by the budgetary authority is incorrect and the result of a unilateral interpretation of the budgetary remark in question. The Commission has already answered this criticism by the Court on many occasions, taking the same position; the Court’s criticism is in no way specific to the nuclear safety programme but is a general criticism applied the Phare and Tacis programmes in their entirety. to 5. MOBILISATION OF AID AND THE RESULTS — notes on projects and programme issues produced by the EC Delegations. Planning Starting up of monitoring activity of nuclear safety projects took more time than for other Tacis projects due to the complexity and confidentiality of this particular area. It was appropriate to start the programmes with a 5. 1. number of general studies before undertaking more concrete, detailed actions. The Court notes that problems raised by monitors’ reports on nuclear safety projects are not always quickly solved by the Commission. The complexity and the number of actors in this kind of project often require The position of certain recipient countries, which did not fully share the Commission’s concerns as regards the safety of their nuclear plants and for which the supply of equipment was the only need, must certainly be seen in relative terms. C 35/48 EN Official Journal of the European Communities 9. 2. 1999 regards the origin of on-site assistance, As the Commission has drawn the management committee’s attention to the necessarily general character of the proposals contained in its initial proposal. The group of experts and the management committee for the Tacis programme have, however, been informed of the progress of the programmes. The Commission has redoubled its efforts to improve communication with the recipients. Furthermore, the permanent presence of European experts on the sites of nuclear power stations is a unique feature of the programme, as well as being a considerable expense. In order to explain the misunderstandings which the programme has suffered, the following must be taken into consideration: 1. the quality of the services provided by these experts, and 2. the differences between the points of view of the lender and the recipients, which are much more marked in the nuclear safety sector than in the other sectors to which the programmes apply. (a) In the case of complex projects, the technical 5. 2. choices which could arise, including, potentially, abandoning the project, cannot be known in advance. A sufficiently detailed definition of the tasks which the contractor must undertake over the whole duration of the project is therefore not possible. In any case, a phase-by-phase approach is imperative for the proper management of public funds. Like the Court, the Commission considers that a phased approach generally leads to better monitoring of the content and the organisation of the contracts. The obvious disadvantage of this approach is that it tends to complicate and slow down the implementation of the projects. 5. 2. (b) Reallocation of the budgets to other projects is desirable only if it is compatible with the duration of the budgetary commitment and if it does not involve an increase in the workload which would prejudice the execution of projects that have already been selected. The ECU 2,7 million project, subsequently cancelled, concerns a study for a new system of protection for the Kola VVER 440/213 reactors. The Russians were very keen to obtain this investment preparation project, and they had decided to request a Euratom loan to finance the corresponding investment. It was only at the end of the Tacis project’s lifespan that the loan request was abandoned. This project, designed to prepare for a major investment, was therefore a fully justified project for Tacis. identified (normally during the financial evaluation of the invitation to tender). 5. 2. (d) The difficult staff situation under which the programme unit had to operate, as recognised by the Court in paragraph 4. 12 of its report, must be borne in mind. in any case exceed the 5. 3. As the requirements resources available, the choice of the best projects should be based on several criteria. For these projects, the active participation of the partners could be regarded as a positive sign for its implementation. The number of partners is indeed high, but it is justified by the desire to ensure a high level of transparency and to ensure an implementation which respects the objectives of our programme. This primarily concerns the technical preparation, the method of awarding the contract and the involvement of the safety authorities. 5. 4. The role of the TPEG is set within a contractual framework. In this context, it is not unusual that Commission contractors visit the recipients without the participation of the Commission. However, important or final discussions have always been carried out by the Commission. The difficult staff situation in the unit concerned, acknowledged by the Court in paragraph 4. 12, must also be borne in mind. 5. 5. It should be noted that the status of the Joint Research Centre, which has allowed it to participate as a contractor in the implementation of the programmes, is possible only in the light of an amendment to the Financial Regulation which was made in May 1995. Furthermore, while the JRC has considerable advantages as a result of its independence, it is not in a position to meet all the needs for expertise required to implement the implementation must programmes. Consequently, continue to rely partly on the Union’s nuclear industry. As regards the TPEG, its formation was investigated by (‘negative the Directorate-General clearance’ was granted). Moreover, the obstacles to its participation in the preparation of the programmes appeared only with the adoption of the third Tacis regulation (1996). for Competition Budgets allocated for on-site activities 5. 2. (c) This is already the practice. However, an increase in the budget allocated to a project can be effected only if the budget balances or reserve funds are available when the need to increase the budget is 5. 6. It should not be concluded that an action is less important because it has been allocated a smaller budget. Other factors such as the intrinsic cost of the services or 9. 2. 1999 EN Official Journal of the European Communities C 35/49 supplies concerned or absorption must be taken into account. the recipient’s capacity for In this context, the difficult staff situation in the unit concerned, acknowledged by the Court in paragraph 4. 12, must be borne in mind. It should be borne in mind that, at the outset, the presence of EU experts at nuclear power plants in the NIS and in the CEECs was looked upon with suspicion by the plant operators. They were often of the opinion that the West had little to teach them and that only equipment supplies were of real interest. Advice and training on operational and organisational issues was at best to be tolerated. On the sites where the contractor’s contribution to operational safety was not appreciated by the recipient, the transfer of the safety culture mainly took the form of training activities created around equipment supply projects, which were therefore not identified as complete projects so that they would not be refused by the recipient. For the sites which have shown a greater capacity for absorption, it has been possible to implement activities that are more targeted to operational safety and are independent of equipment supplies. 5. 7. The Commission is aware that the budgets allocated to nuclear safety are considerably less than actual requirements and is counting on its actions to serve as an example and guide. The budgets are therefore determined mainly by considerations of lending and absorption capacity. Delays and the stage reached in implementing the operations Delays in preparing contracts 5. 8. Since 1997, the Commission has put in place several programme to implementation, especially: accelerate measures 1. a reduction in the number of projects financed, 2. cancellation of projects which cannot be contracted quickly enough, 3. commitment of budgets only for projects that are sufficiently developed to be implemented immediately after the financing decision. 5. 9. As far as equipment supply projects are concerned, the stages where the delays occur are mainly: reached Stage projects in implementing operational safety It is easier to implement technical assistance 5. 11. is therefore not projects than concrete projects. It it should be quicker. Furthermore, surprising that technical assistance has a raison d’eˆtre independent of equipment supplies. Having said that, the Commission does accept that neither its contractors’ services (on-site operators) nor its own supervision of these contractors has been of the standard required. In this context, the difficult staff situation in the unit concerned, acknowledged by the Court in paragraph 4. 12, must be borne in mind. 5. 12. (a) and (b) The Commission accepts that its procedures have contributed to the slow implementation of the programmes. The question of how to adapt them will be considered as part of the process of drawing up the Commission’s proposal the new Tacis Regulation. for 5. 12. (b) As regards the tendering procedures more particularly, it should be mentioned that several projects were delayed by the refusal of the recipient bodies in the partner countries to accept or cooperate with the opening of the contracts to competition, even when this was objectively justified. The Commission on several occasions consulted the operators involved to see if competitive bidding could be applied to the programme. Their response was to confirm that invitations to tender should indeed be the basis on which equipment supply contracts should be awarded. 5. 13. It is natural that the recipients should wish that the assistance promised them should be provided as quickly as possible, by giving them as much authority as possible in defining and implementing the programmes, and that they should not concern themselves greatly with the procedures followed: Timetables 1. definition and approval of specifications, which are the responsibility of the on-site assistance operators and the recipients, and 2. evaluation and approval of the tenders, which are principally the responsibility of the on-site assistance operators and the Commission. At the outset, the only timetables possible were those based on European parameters. It rapidly became clear that the local situations encountered by the partners and the application of new procedures for all the participants rendered these timetables irrelevant, in spite of the fact that they were supposed to be binding, and each partner laid responsibility at the other’s door. C 35/50 EN Official Journal of the European Communities 9. 2. 1999 Procedures The Commission has recently revised the procedure for awarding contracts in on-site assistance, so as to clarify who is responsible for what and reduce the number of stages where Commission approval is necessary. It remains the case, however, that the procedures put in place to ensure rigorous management of public funds are sometimes too complex for the operational requirements of the Tacis programme. These procedures are not very different from those which govern the use of public funds in the Member States. Participation of the recipients As in the other sectors of the Tacis programme, the recipient has a vote in the evaluation committees. Communication with the Russian recipients has been considerably improved with the creation of the Joint Management Unit in Moscow, and has compensated to some extent for the Commission’s lack of internal resources. Assistance to the safety authorities 5. 16. The Commission recognises the truth in the Court’s analysis of the assistance to the safety authorities. This component of the Tacis programme is a key element in promoting nuclear safety in the recipient countries. It should be stressed that the Commission’s approach, even though it may appear unwieldy in its implementation, is based on respect of a basic code of ethics intended to strengthen the safety authorities’ independence: 1. as a general rule, the participation of the formal recipients in the Tacis programme cannot be financed by the Commission, 2. the granting of licences was not financed by the Commission, so as to avoid creating a conflict of interests for the safety authority, 3. services for the safety authority must be provided by its European counterparts so as to avoid a situation where industrial players are advising the safety authority. Safety studies and analyses 5. 18. So as not to hold up the implementation of the Tacis programme, the Commission concluded contracts under the 1991 programme which, because of doubts about the current system of civil liability, included restrictive clauses on sending the results of studies to the recipients. However, the Commission did at the same time try to find an interim solution to this problem, pending Russia’s ratification of the Vienna Convention. These efforts led to a Memorandum of Understanding being signed with the Russian Federation in 1995, which includes a provision on nuclear civil liability. Since the Memorandum was signed, all restrictive clauses proposed by the contractors have been systematically rejected. In the course of 1997 a solution was also found for contracts concluded before the Memorandum was signed. There was an exchange of correspondence between the contractors concerned and the Minister for Atomic Energy of the Russian Federation (Minatom), since when the respective reports have been sent to the recipients. It should be noted that the complaints made on this subject are not entirely justified: the Russian technical institutes did in fact collaborate closely on the studies concerned. 5. 19. The Commission agrees with the Court about the importance of proper management of sub-contracts with the Russian institutes. These Russian institutes often provide input for our projects in more than one capacity, as design institute, preferred industrial partner of the final recipient and main instrument of cooperation and technology transfer from the Union to the recipient. The approach chosen, particularly for the study contracts under the 1991 Tacis programme, consisted of imposing the same amount for the subcontract on the tenderers. This amount was set at a flat rate in advance by the Commission on the basis of a technical opinion by European Union experts. In all cases except one, this the Russian amount was subcontractors. fact accepted by in Furthermore, the fees paid to European experts have for the last few years been between 7 and 9 times those paid to Russian experts. This difference takes account of many factors such as purchasing power parities, wage costs, and working tools and methods. 5. 20. As has already been said, the Commission avoids interfering in questions of subcontracting. However, it does encourage: a) local subcontractors not to accept clauses linking their payment to the main contractor’s payment; b) tenderers to specify the subcontracting terms, which would allow the subcontractors to be paid an advance on their services. In certain cases, in order to avoid a dispute between the contractor and the local subcontractor prejudicing the programme as a whole, the Commission has tried to 9. 2. 1999 EN Official Journal of the European Communities C 35/51 resolve the points at issue. It has also happened that a subcontractor has complained of not being paid, while the contractor has been able to prove that he has made the payments. development of nuclear safety in the countries concerned, of the particularly difficult economic conditions that the players involved have to face. This goes as much for the safety authorities as for the operators of nuclear plants. Actual mobilisation of the appropriations Effectiveness 5. 21. and 5. 22. Since 1997, the Commission has made a number of changes to the programme that will lead to more rapid implementation in the future. These include: — reduction of the number of projects selected for financing, — cancellation of projects whose launch is unduly delayed, — commitment of funds only when projects have been sufficiently developed to permit an immediate launch after the financing decision, — establishment of better lines of communication with the the Moscow-based Joint Management Unit. beneficiaries, example through for 5. 23. As a general rule the recipients confirm their interest in these projects which have not yet been launched and deplore the possibility of cancelling projects for which considerable preparatory work has often been done. 6. CONCLUSION Overall evaluation 6. 2. The Commission is pleased to note that the Court’s findings confirm the progress that has been made in developing, together with the beneficiaries, a common understanding of the objectives of the programme and a climate of trust and cooperation. The Commission also accepts that the programme has suffered from excessive delays and, to a lesser degree, distortions of the original objectives. This is not surprising in view of the difficulties associated with a dialogue between two very different safety cultures. While stressing the fundamental difficulty that exists in measuring the results of an action which is limited in terms of needs and which in large measure concerns the safety culture, it should be mentioned that several sources have confirmed that positive results have been achieved. Clearly account must be taken, when assessing the 6. 3. As indicated in points 2. 1, 3. 2, 3. 5 to 3. 7 and 5. 1, the Commission has acted within the framework of a well-defined strategy. As far as the applicant countries are concerned, this strategy is clearly indicated in Agenda 2000 and in the communication to the Council and Parliament of 31 March 1998 (COM (1998) 134). the strategic priorities with The Commission is making a considerable effort to discuss the countries concerned. This is the case for the applicant countries under the accession partnerships and for the new independent States. As far as the latter in particular are concerned, the Commission is having regular discussions with Ukraine, both bilaterally and in the context of the G7. As for Russia, a new initiative has been undertaken to redefine the priorities for the future. The Court recommends that better account should be taken of the economic reality of the recipient countries. The Commission considers that it is necessary to find a way of cooperating with these countries so that they can give sufficient priority to nuclear safety and reach realistic solutions for their energy problems, while taking account of the need to develop alternative energy sources and increase energy efficiency. Efficiency 6. 4. to 6. 6. The Commission has taken concrete steps to improve the implementation of the programmes. — In March 1998, the Commission set up an interdepartmental group responsible for improving the coordination of its activities in the nuclear sector in the East and making better use of internal resources. — Since September 1997 the resources available at the Joint Research Centre have been fully used at all stages of the programme. — Generally speaking, the technical assistance programmes will be improved as a result of the creation of the Joint Relex Service (SCR) in 1998. implementation of the C 35/52 EN Official Journal of the European Communities 9. 2. 1999 — A Joint Management Unit was set up at the beginning improve of 1998 transparency for the Russian recipients. in Moscow, which should The Commission will consider an update of procedures under the new Tacis regulation. the Economy 6. 7. See paragraph 4. 6. 6. 8. and 6. 9. The Commission pays particular attention to whether the European contractors and the partners in the recipient countries are in order. the contractual relations between Cooperation between the EU companies and the recipient organisations does exist. The Commission agrees that it must be strengthened and that the problems and misunderstandings of the past must be avoided. In this context, it is important to assess the real costs of the organisations in these countries, which rarely have cost-accounting systems. Transparency of the operations to carry out the final payments and then will disappear. Article B7-535 concerns cooperation with the central and eastern European countries and the newly independent States under the Euratom Treaty. In 1997, these actions were financed by articles relating to the Phare and Tacis programmes. Article B7-536 (Community contribution to the European Bank for Reconstruction and Development for the Chernobyl Shelter Fund) also concerns a one-off action. However, the largest amounts come from the Phare and Tacis headings. These are geographical programmes intended for countries listed in the legal basis and covering several fields. For these two programmes, the amounts intended for projects relating to nuclear safety can come from multi-recipient programmes or be included in national programmes. This is the case for all the sectoral programmes intended for these countries and included in the two big geographical programmes. Creating special budget headings for each heading would lead to a proliferation of budget headings for each geographical area. This system gives an overview of the amounts intended for each country on the one hand and of the horizontal programmes on the other. The needs of the various countries are very different and this must be taken into account. 6. 10. It is true that the operations relating to nuclear safety are financed from several budget headings. Article B7-534 (Completing the programme of cooperation on nuclear safety with the countries of central and eastern Europe and the new independent States) now exists only As regards the monitoring and the reports that the Court would like, the nuclear sector is of course included in the Phare and Tacis annual reports sent to the budgetary authority and published. In general, each programme is also evaluated individually