Nuclear Safety
Construction of the Protective Shelter for the Chernobyl Nuclear Reactor Faces Schedule Delays, Potential Cost Increases, and Technical Uncertainties Gao ID: GAO-07-923 July 19, 2007In 1986, an explosion at the Chernobyl nuclear power plant in Ukraine destroyed the reactor building and released massive amounts of radioactive contamination. A temporary shelter was built over the damaged reactor to prevent further contamination. The United States is a major donor to an international project to build a new shelter to replace the existing one, which is badly deteriorating. GAO was asked to (1) assess the progress toward completing the new shelter, (2) review the cost estimates to complete the project, and (3) assess the U.S. role in overseeing and funding the project. To carry out its work, GAO analyzed program documents, interviewed U.S. and international program officials, and visited the Chernobyl nuclear power plant.
Although two of three construction components--site preparation and stabilization of the existing shelter--are nearly finished, construction of the new shelter has fallen about 7 years behind schedule. Over the past couple of years, the main reason for schedule slippage has been the failure to award a construction contract. The lack of a contract is partly the result of a lengthy disagreement between Ukraine and the European Bank for Reconstruction and Development (EBRD). In late 2006, the Chernobyl nuclear power plant director told GAO that the donors should not make any additional contributions to the project until contracting issues were resolved. These problems contributed to donors' concerns about when and at what cost the project will be completed. In addition, technical uncertainties associated with the construction of the new shelter have also contributed to schedule slippages and threaten to further delay the project. The estimated cost to complete the Chernobyl Shelter Project is currently $1.2 billion. However, a higher cost estimate is likely due to, among other things, escalating prices for labor and materials. Also, many other factors, such as expanding the project's scope to include the removal of the radioactive reactor fuel, could raise costs further. The Department of State, which has the lead role for the U.S. government, relies on the EBRD to directly manage the project, including the disbursement of funds. The United States has pledged $203 million for the project but still has to provide $49 million to meet its current commitment. In addition, the United States will likely be requested to provide funds beyond the $203 million pledged because some donor governments may not have the resources or may no longer be willing to provide additional funds. To date, the United States has not placed conditions or benchmarks tied to tangible progress toward project completion on its contributions to the Chernobyl Shelter Fund.
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Director: Team: Phone:GAO-07-923, Nuclear Safety: Construction of the Protective Shelter for the Chernobyl Nuclear Reactor Faces Schedule Delays, Potential Cost Increases, and Technical Uncertainties
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Report to the Ranking Member, Subcommittee on National Security and
Foreign Affairs, Committee on Oversight and Government Reform, House of
Representatives:
United States Government Accountability Office:
GAO:
July 2007:
Nuclear Safety:
Construction of the Protective Shelter for the Chernobyl Nuclear
Reactor Faces Schedule Delays, Potential Cost Increases, and Technical
Uncertainties:
Chernobyl Shelter Project:
GAO-07-923:
GAO Highlights:
Highlights of GAO-07-923, a report to the Ranking Member, Subcommittee
on National Security and Foreign Affairs, Committee on Oversight and
Government Reform, House of Representatives
Why GAO Did This Study:
In 1986, an explosion at the Chernobyl nuclear power plant in Ukraine
destroyed the reactor building and released massive amounts of
radioactive contamination. A temporary shelter was built over the
damaged reactor to prevent further contamination. The United States is
a major donor to an international project to build a new shelter to
replace the existing one, which is badly deteriorating. GAO was asked
to (1) assess the progress toward completing the new shelter, (2)
review the cost estimates to complete the project, and (3) assess the
U.S. role in overseeing and funding the project. To carry out its
work, GAO analyzed program documents, interviewed U.S. and
international program officials, and visited the Chernobyl nuclear
power plant.
What GAO Found:
Although two of three construction components”site preparation and
stabilization of the existing shelter”are nearly finished, construction
of the new shelter has fallen about 7 years behind schedule. Over the
past couple of years, the main reason for schedule slippage has been
the failure to award a construction contract. The lack of a contract
is partly the result of a lengthy disagreement between Ukraine and the
European Bank for Reconstruction and Development (EBRD). In late 2006,
the Chernobyl nuclear power plant director told GAO that the donors
should not make any additional contributions to the project until
contracting issues were resolved. These problems contributed to
donors‘ concerns about when and at what cost the project will be
completed. In addition, technical uncertainties associated with the
construction of the new shelter have also contributed to schedule
slippages and threaten to further delay the project. The estimated cost
to complete the Chernobyl Shelter Project is currently $1.2 billion.
However, a higher cost estimate is likely due to, among other things,
escalating prices for labor and materials. Also, many other factors,
such as expanding the project‘s scope to include the removal of the
radioactive reactor fuel, could raise costs further.
The Department of State, which has the lead role for the U.S.
government, relies on the EBRD to directly manage the project,
including the disbursement of funds. The United States has pledged
$203 million for the project but still has to provide $49 million to
meet its current commitment. In addition, the United States will
likely be requested to provide funds beyond the $203 million pledged
because some donor governments may not have the resources or may no
longer be willing to provide additional funds. To date, the United
States has not placed conditions or benchmarks tied to tangible
progress toward project completion on its contributions to the
Chernobyl Shelter Fund.
Conceptual Design of the New Shelter:
(See PDF for image.)
Source: Chernobyl Shelter Project Management Unit
[End of figure]
What GAO Recommends:
GAO recommends, among other things, that the Secretary of State
consider, in consultation with other donor governments and the EBRD,
establishing benchmarks for the project that need to be met before
making additional pledges of funds in the future. State generally
agreed with our recommendations. However, State cautioned that the use
of benchmarks could lead to further project delays or increase costs.
We strongly believe that benchmarks could encourage timely project
completion at agreed upon costs.
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-923].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Gene Aloise at (202) 512-
3841 or aloisee@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief;
Background;
Construction of the New Shelter Is about 7 Years behind Schedule and
Could Face Further Delays;
Estimated Costs to Complete the Project Are $1.2 Billion and Will
Likely Increase, and Final Costs Are Uncertain;
State Has No Direct Management Responsibilities for the Chernobyl
Shelter Project but Has Played a Key Role in Providing Funding;
Conclusions;
Recommendations for Executive Action;
Agency Comments and Our Evaluation;
Appendix I: An Analysis of the Chernobyl Nuclear Power Plant Accident;
Appendix II: Objectives, Scope, and Methodology;
Appendix III: Donor Governments' Contribution Agreements with the
Chernobyl Shelter Project, as of September 2006;
Appendix IV: Comments from the Department of State;
Appendix V: Comments from the U.S. Agency for International Development;
Appendix VI: GAO Contact and Staff Acknowledgments;
Tables:
Table 1: ChNPP Director's Analysis of Schedule Delays and Cost
Increases for Other Internationally Funded Construction Projects at
Chernobyl, as of October 2006;
Table 2: U.S. Pledges to the Chernobyl Shelter Project;
Figures:
Figure 1: The Damaged Reactor Building and the Existing Shelter Built
over It;
Figure 2: Design of the Proposed New Chernobyl Shelter;
Figure 3: Completed Change Facility at the Chernobyl Site;
Figure 4: Stabilization Work for the Western Wall;
Figure 5: The Interim Spent Fuel Storage Facility at Chernobyl;
Figure 6: Chernobyl Project Contribution Agreements from the European
Commission, United States, other G-7 countries, Ukraine, and 21 other
countries, as of September 2006;
Abbreviations:
ChNPP: Chernobyl Nuclear Power Plant; CSF: Chernobyl Shelter Fund;
DOE: U.S. Department of Energy;
EBRD: European Bank for Reconstruction and Development:
IAEA: International Atomic Energy Agency;
G-7: Group of Seven major industrialized countries;
MOU: memorandum of understanding;
NRC: U.S. Nuclear Regulatory Commission;
PMU: project management unit;
RBMK: reactor bolshoy moshchnosty kanalny;
SIP: Shelter Implementation Plan;
State: U.S. Department of State;
USAID: U.S. Agency for International Development:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
July 19, 2007:
The Honorable Christopher Shays:
Ranking Member:
Subcommittee on National Security and Foreign Affairs:
Committee on Oversight and Government Reform:
House of Representatives:
Dear Mr. Shays:
On April 26, 1986, the worst accident in the history of civilian
nuclear power occurred at the Chernobyl nuclear power plant in Ukraine,
where an explosion destroyed the core of reactor unit four containing
approximately 200 tons of nuclear fuel[Footnote 1]. The explosion also
destroyed much of the reactor building, severed the reactor's cooling
pipes and spewed hot fragments of reactor fuel from the core, igniting
at least 30 fires in nearby buildings. The explosion and heat from the
reactor core propelled radioactive material as much as six miles high,
where it was then dispersed mainly over 60,000 square miles of Ukraine,
Belarus, and Russia. Smaller amounts of radioactive material spread
over eastern and western Europe and Scandinavia and were even detected
in the United States. About 6 months after the accident, the
construction of a 21-story-high metal and concrete shelter was
completed to enclose the damaged reactor and confine the remaining
radioactive material. This shelter--which was never intended to serve
as a permanent solution for confining the long-lived and highly
radioactive material--is badly deteriorating, and rain entering through
holes and cracks is corroding and further weakening the structure.
International nuclear safety experts, including officials from the
International Atomic Energy Agency (IAEA), are concerned that the
weakened shelter could collapse and release a radioactive dust cloud
that could, among other things, create a health and safety hazard,
complicate continuing accident recovery efforts, and have further
adverse environmental impacts on the region. Figure 1 shows the impact
of the explosion on the reactor building and the hastily built shelter
that needs to be replaced.
Figure 1: The Damaged Reactor Building and the Existing Shelter Built
over It:
[See PDF for image]
Source: Chernobyl Nuclear Power Plant
[End of figure]
The United States and other countries sponsored the development of a
Shelter Implementation Plan (SIP), finalized in 1997, that outlined the
steps to create safe conditions for the damaged reactor and the
existing shelter. The SIP is the basis for an ongoing project to
replace the existing shelter with a new one. The new shelter is
technically known as the New Safe Confinement. For the purposes of this
report, we refer to project activities performed under the SIP as the
Chernobyl Shelter Project and refer to the New Safe Confinement as the
new shelter.
The new shelter is designed to be an arch-shaped structure enclosed by
flat walls at each end, standing roughly 32 stories high and wider than
two football fields at its base. To minimize the workers' exposure to
radiation, the new shelter will be built at a distance from the
existing shelter and then slid over it on concrete tracks. After it is
in place, the new shelter is designed to reduce the exposure of the
existing shelter to weather and minimize the release of radioactive
dust resulting from a possible collapse of the existing shelter. This
structure, which has an expected service life of at least 100 years, is
also intended to support the deconstruction of the unstable upper
portions of the existing shelter and the eventual removal of the
remaining highly radioactive material that contains fuel from the
damaged reactor core. As currently envisioned, the removal of this
material will not be undertaken until a long-term storage repository is
available, likely decades after the end of the shelter project. Ukraine
will be responsible for removing this material and storing it, as this
activity is outside the scope of the Chernobyl Shelter Project.
Figure 2 shows the conceptual design of the new shelter.
Figure 2: Design of the Proposed New Chernobyl Shelter:
[See PDF for image]
Source: Battelle Memorial Institute
[End of figure]
In addition to replacing the shelter, the project has two other main
construction components--preparing the site for construction and
stabilizing the existing shelter to prevent its collapse. The project
is financed by 29 countries and the European Commission, primarily
through donations to the Chernobyl Shelter Fund (CSF).[Footnote 2] As
of September 2006, payments to CSF, earned interest, and in-kind
contributions had reached about $930 million.[Footnote 3] At that time,
almost $380 million from CSF had been spent for administrative costs
and project contracts. Thus far, the United States has contributed
about $154 million ($169 million adjusted for inflation) of the total
$203 million it has pledged since 1997.[Footnote 4] As the largest
single-country donor, the United States has provided roughly 19 percent
of total contributions to CSF, whereas the European Commission has
contributed the largest portion, about 26 percent of all contributions.
U.S. funding has come from appropriations under the FREEDOM Support
Act, which broadly supports economic and political reforms in Ukraine
and other newly independent countries following the 1991 dissolution of
the Soviet Union.[Footnote 5] The United States and other countries
gave the responsibility to administer the Chernobyl Shelter Fund to the
European Bank for Reconstruction and Development (EBRD), a multilateral
bank that invests in countries from central Europe and the former
Soviet Union to help build market economies and democracies.[Footnote
6] EBRD subsequently established a framework for the project, including
the CSF rules that defined the roles for the bank and donor
governments. In addition, a Framework Agreement between EBRD and
Ukraine was ratified by the Ukrainian government, which created a legal
basis for the project in Ukraine.
In addition to EBRD, at least 10 organizations play a role in the
Chernobyl Shelter Project, including a joint committee of high level
officials from EBRD and the government of Ukraine, and Ukrainian
ministries and regulators.[Footnote 7] An assembly of contributors--
composed of representatives from the donor governments that pledged
about $3 million or more--acts similar to a board of directors and
approves the overall policy direction for the project.[Footnote 8] EBRD
provides its expertise to manage the fund and, among other things,
provides grants to the state-owned Chernobyl Nuclear Power Plant
(ChNPP), the Ukrainian organization that is ultimately responsible for
the project. ChNPP established a management team--known as the project
management unit (PMU)--with a staff of about 160 employees. The PMU,
which is responsible for the day-to-day implementation of the project,
is staffed by ChNPP employees and a consortium of consultants from
three western companies: (1) Bechtel International Systems
Incorporated, which provides the PMU's managing director and has lead
responsibility for project management; (2) Battelle Memorial Institute,
whose main tasks involve environmental, health, and safety issues; and
(3) Electricité de France, a French company that provides technical
expertise.[Footnote 9]
As a major donor country, the United States plays a prominent role in
the project's assembly of contributors. Although the Department of
Energy (DOE) and the U.S. Nuclear Regulatory Commission (NRC)
participated in various safety and regulatory tasks for the Chernobyl
Shelter Project early on, they no longer have any direct responsibility
for the project. The Department of State (State) serves as the primary
U.S. government agency for Chernobyl shelter-related matters. In
addition, the U.S. Agency for International Development (USAID)
supports State and, among other things, administers payments to the
shelter fund.
Because of the significant U.S. investment in this project and an
interest in seeing its timely completion, you requested that we
undertake a review of U.S. and international efforts to construct a new
shelter. In response to your request, this report (1) assesses progress
toward completing the new shelter and factors that impact completion,
(2) reviews the cost estimates to complete the project, and (3)
assesses the U.S. role in overseeing and funding the project.
To examine the Chernobyl Shelter Project's progress, we analyzed
documentation and interviewed EBRD officials in London and Ukraine,
Ukrainian officials in Kyiv and at the Chernobyl site, and officials
with the PMU in the United States and at Chernobyl. We also reviewed
project progress reports, management audits, project schedules, and
risk assessment documents. To review the project's estimated costs, we
obtained data from and discussed these cost issues with officials from
the United States and other donor governments, EBRD, and the PMU. We
also reviewed project cost estimates and EBRD summaries of project
contributions by the donor governments. To determine the United States'
role in overseeing and funding the project, we interviewed and obtained
documentation from State and USAID. We also interviewed DOE and NRC
officials to obtain information about their agencies' roles in
providing assistance to Chernobyl. We performed our work from May 2006
through June 2007 in accordance with generally accepted government
auditing standards. Further details of our scope and methodology are
presented in appendix II.
Results in Brief:
Although two of three construction components--site preparation and
stabilization of the existing Chernobyl shelter--are nearly finished,
completion of the project's final major and most visible component--the
new shelter--is about 7 years behind schedule. The schedule to complete
the new shelter has slipped from 2004 to no sooner than 2011. Over the
past couple of years, the main reason for schedule slippage has been
the failure to award a contract to construct the new shelter, which has
developed into a lengthy and contentious issue between Ukraine and EBRD
and raised concerns among the donors about when and at what cost the
project will be completed. Specifically, Ukraine disagreed with the
likely selection of a French contractor to construct the new shelter,
but EBRD contended the selection process could not deviate from the
bank's procurement rules. By the fall of 2006, the disagreement had so
strained relations between Ukraine and EBRD that the Chernobyl plant
director told us the donors should not make additional contributions
until contracting issues are resolved. More recently, however, an EBRD
official said that relations were improving. In addition, frequent
changes in Ukrainian leadership responsible for the project, overall
project management complexity, and technical uncertainties associated
with the construction of the new shelter have also contributed to
schedule slippages and threaten to further delay the project:
*The lack of stable leadership and continuity among key Ukrainian
organizations and officials has and could continue to create delays.
For example, in the last 6 years, there have been four plant directors
who are responsible for all major Ukrainian decisions for the project.
According to a senior PMU official, the frequent change of directors
affects the schedule because the project is forced to adjust to each
director's new approach.
*The many organizations that impact the project's performance-
-including the assembly of contributors, EBRD, as well as Ukrainian
ministries and regulators--have made it difficult to reach unanimous
and quick agreement on project decisions.
*Technical uncertainties associated with constructing a one- of-a-kind
structure at a radioactively contaminated site could also result in
delays. The new shelter's final design will require the approval of
Ukraine's regulatory agencies. If the final design deviates
significantly from the already approved conceptual design, the
regulators may require additional time to review and clarify new design
issues. Moreover, if unexpectedly large amounts of high-level
radioactive waste are found on site, work could be stalled while
details for removal and storage are resolved.
The estimated costs of completing the Chernobyl Shelter Project are
currently $1.2 billion and will likely increase. In 1997, a preliminary
estimate of $758 million was developed to allow fund- raising for the
project to begin. This estimate excluded a variety of costs that were
later added to make a more thorough estimate--such as reserve funds to
provide for project uncertainties and risks as well as rising material
and labor prices. When these costs were added in 2003, the total
estimated cost increased to over $1 billion. The estimate rose again to
$1.2 billion in 2006, which primarily reflected reconciling the
estimated cost of constructing the new shelter with actual contractor
bids. EBRD officials told us that the final project cost continues to
be difficult to estimate because the single most expensive project
task--the construction of the new shelter, estimated to cost over $500
million--has not begun. However, a higher cost estimate than $1.2
billion is likely because of, among other factors, rising prices for
labor and materials during the delay in awarding the new shelter
contract, according to a PMU cost expert. PMU officials and
representatives from several donor governments, including the United
States, stated that many other factors, such as expanding the project's
scope to include the removal of the radioactive fuel from the reactor,
could lead to further cost increases. Many of these representatives are
also concerned that shelter costs are likely to rise because
internationally funded construction projects often experience
significant cost overruns. For instance, Chernobyl's plant director
said the project could repeat the pattern of schedule delays and rising
costs found in other Chernobyl projects. One of those projects--the
construction of a facility to store spent nuclear fuel--was suspended
in 2003 because of design flaws. An additional $150 million to $200
million--on top of the $96 million already spent--may be needed to
modify or completely rebuild the facility.
The U.S. State Department, which has the lead role for the U.S.
government, does not directly manage or oversee the Chernobyl Shelter
Project, but it does provides funding through EBRD. Similar to the
other contributors, State relies on EBRD to provide oversight and
management of the Chernobyl shelter fund. The project's management
structure limits State's role, but the agency primarily seeks to exert
influence on the project's direction and performance through the
assembly of contributors. However, State's role in influencing the
project's direction is constrained because all major decisions must be
based on consensus of assembly members. Despite these limitations,
State recently played a key role in trying to move the project forward.
Specifically, State took the lead at an October 2006 assembly meeting
to address issues between EBRD and Ukraine about the selection of a
contractor to complete the new shelter. State's proposal--to have a
Ukrainian-selected observer monitor continuing contract negotiations--
was accepted by the contributors and Ukraine as an interim step toward
awarding the final contract. Regarding State's role in providing
project funding, State officials said the department intends to pay the
remaining $49 million of the $203 million pledged by the United States
to the Chernobyl Shelter Project, even though FREEDOM Support Act
funds, which are State's exclusive source for funding the project, have
been decreasing. The United States will likely be requested to provide
funds beyond those already pledged because, under current project cost
projections of $1.2 billion, additional funds totaling about $190
million will be needed from the donors. According to State and United
Kingdom officials, some donor governments may not have the resources--
or may no longer be willing--to provide funds beyond those already
pledged. To date, the United States has not placed conditions on the
contributions made to the Chernobyl Shelter Fund--that is, specific
benchmarks tied to tangible progress toward project completion.
Moreover, since State may need to approach the Congress for additional
funds, the Congress, in our view, will need more information than
currently provided. State has not systematically provided the Congress
with detailed information about the project's status, including cost
estimates and schedule slippages. Rather, in its annual congressional
budget justification for foreign assistance, it only provides a brief
statement about its continuing financial support of the shelter project.
To help ensure that the United States has a clear and consistent
strategy, as well as a sound basis for continuing to support the
Chernobyl Shelter Project, we are recommending that, among other
things, the Secretary of State consider, in consultation with other
donor governments and the European Bank for Reconstruction and
Development, establishing benchmarks for the project that need to be
met before additional pledges of funds are made. In addition, to
increase State's accountability and transparency for funding the
project, the Secretary of State should provide a detailed annual report
to the Congress about the status of the project, including project
costs, project milestones, and estimated completion dates.
We provided the Department of State and the U.S. Agency for
International Development with draft copies of this report for their
review and comment. In their written comments, both State and USAID
agreed with our main findings and State generally agreed with our
recommendations to the Secretary of State. However, both State and
USAID raised some concerns regarding the establishment of specific
benchmarks for the project. Both agencies asserted that linking
additional funds to specific performance benchmarks requires careful
consideration because it could lead to further project delays or
increase costs. We strongly believe that benchmarks could encourage
timely project completion at agreed upon costs.
Background:
The Chernobyl accident left Ukraine with a costly legacy of population
displacement as well as a host of health care and economic problems.
Approximately 116,000 area residents in 1986, and another 220,000 in
subsequent years, were evacuated and in need of resettlement from the
most heavily contaminated areas in the region. Although international
nuclear safety and health experts report that 30 workers died in 1986
from the explosion or severe radiation exposure, the magnitude of
longer-term health consequences resulting from the accident is still
being investigated. According to the United Nations' Chernobyl Forum,
the regional health impacts of the Chernobyl accident remain a concern
20 years after the accident. Of particular concern is the large number
of thyroid cancer cases among children who drank milk that was
contaminated by radioactive fallout from the Chernobyl accident. In
addition, in a 2006 United Nations sponsored report, international
health experts predicted that radiation could cause up to 4,000
eventual cancer deaths among the higher exposed Chernobyl populations,
such as the emergency workers who helped put out the fires and build
the original shelter.
In addition to the human toll, the Chernobyl accident has resulted in
significant economic costs to Ukraine. These costs, which are difficult
to quantify, include the removal of agricultural land and timber
forests from production as well as the closure of agricultural and
industrial facilities to protect people from further radioactive
contamination. One major concern to Ukraine has been the displacement
of about 6,000 workers who were employed by the ChNPP. Finally, costly
government expenditures to remediate contaminated areas, provide
medical services and social benefits for the affected populations, and
restore the region's social and economic well-being have placed a heavy
burden on Ukraine's national budget. Ukraine still devotes 5 percent to
7 percent of total government expenditures to Chernobyl-related
benefits and programs.
U.S. participation in the Chernobyl Shelter Project began as part of a
larger U.S. and international effort to improve the safety of Soviet-
designed civilian nuclear power reactors. This effort, which was
established in the early 1990s, targeted the highest-risk Soviet-
designed reactors for short-term safety upgrades until they could be
permanently shut down.[Footnote 10] As part of this effort, in 1995
Ukraine, the European Commission, and the "Group of Seven" major
industrialized countries (G-7), including the United States, signed a
memorandum of understanding (MOU) about the closure of the remaining
operating reactors at the ChNPP.[Footnote 11] The MOU--which led to the
closure of the last operating reactor at Chernobyl in late 2000--also
stated that a cost-effective and environmentally sound approach to
address the damaged shelter would be cooperatively developed.
U.S. assistance with Chernobyl-related problems has also evolved within
broader policy objectives to forge a political and economic
relationship with Ukraine. Since the Soviet Union's dissolution led to
Ukraine's independence in 1991, the United States has sought to support
its transition to a democratic society with a market-based economy that
is more closely integrated with Europe and the United States. As part
of this assistance, the United States has been a major contributor of
funds to help Ukraine address social, economic, and health problems
associated with the accident and its aftermath. For example, State
reports its programs for Ukraine have funded the delivery of $582
million in humanitarian assistance since 1992, which were collected
from private donations and the Department of Defense. Approximately one-
half of this assistance was targeted to those affected by the Chernobyl
accident. The United States has also invested nearly $12 million in
health programs. These programs included screening and treatment for
childhood physical and mental illnesses related to Chernobyl radiation,
breast cancer awareness, and access to modern cancer treatment.
Construction of the New Shelter Is about 7 Years behind Schedule and
Could Face Further Delays:
Two of the Chernobyl Shelter Project's three major construction
components--site preparation and existing shelter stabilization--were
nearly finished at the end of 2006, about a decade after the project's
plan was developed. However, the project's largest construction task--
building the new shelter--is not expected to be completed until about 7
years after the original scheduled completion date of 2004. As a result
of protracted delays in awarding the contract to design and build the
new shelter, construction has not yet begun. Furthermore, problems
surrounding the project have strained relations between EBRD and
Ukrainian officials, raising concerns among the donors, including the
United States, about the prospects for completing the project.
Moreover, frequent leadership changes among Ukrainian ministries and
officials, management difficulties associated with the many
organizations participating in the project, and technical uncertainties
related to constructing a one-of-a kind structure have delayed and
could continue to delay the completion of the new shelter.
Work to Prepare the Chernobyl Site and Stabilize the Existing Shelter
Is Nearing Completion, but Construction on the New Shelter Has Not Yet
Begun:
Two major activities integral to the Chernobyl project are nearing
completion--providing infrastructure improvements at the Chernobyl site
and stabilizing the existing shelter to prevent its possible collapse.
Both of these activities are essential precursors to replacing the
existing deteriorating shelter with a new one. Specifically, site
preparation was necessary to create facilities and infrastructure
services to support the construction work on both the existing and new
shelters. Some infrastructure tasks remain to be done, such as an
Integrated Automated Monitoring System, which monitors structural
movements, seismic vibrations, radiation, and nuclear measurements
within the existing shelter. Also, a decision to refurbish or construct
a sewage treatment plant is still under consideration. Nevertheless,
many support facilities and infrastructure services were operational by
early 2005. The completed site preparation work includes refurbishing
power, water, and drainage infrastructure as well as providing road and
rail connections to two operations areas that support existing shelter
stabilization and new shelter construction. In addition, a building
with change rooms, showers, and radiological monitoring facilities--
known as a change facility--has been constructed for controlling the
access of workers to the construction site. This building will allow up
to 1,430 workers involved in the construction of the new shelter to
change their work clothes daily as a precaution against a possible
spread of radioactive contamination. This building also includes
medical and ambulance facilities for responding to medical emergencies.
Figure 3 shows the change facility that will support the health and
safety needs of the Chernobyl construction workers responsible for
building the new shelter.
Figure 3: Completed Change Facility at the Chernobyl Site:
[See PDF for image]
Source: Chernobyl Nuclear Power Plant.
[End of figure]
The second major construction component--the measures to stabilize and
thus minimize the likelihood of the existing shelter's collapse--was
essentially completed at the end of 2006. According to a PMU official,
the main remaining tasks are a monitoring period through about
September 2007, which will lead to a determination about the possible
need for some additional work, and the commissioning of the
stabilization measures. Although emergency stabilization of the
shelter's roof structures and an adjacent ventilation stack was
completed in the late 1990s, the bulk of the stabilization activities
started in December 2004 and was completed 2 years later. Analysis of
the risks of radiation exposure to workers from the stabilization work
and the probability and consequences of shelter accidents led to a
project decision to pursue only 9 stabilization measures, instead of
the original 29 measures recommended by a PMU contractor. These 9
measures focus on strengthening the existing shelter's walls and roof
support beams in particular places. For example, the last of these
measures was to transfer about half the weight of the heavy roof load
from the western wall of the reactor building onto support towers.
Figure 4 shows a portion of the metal support towers that are intended
to stabilize the main roof beams.
Figure 4: Stabilization Work for the Western Wall:
[See PDF for image]
Source: Chernobyl Nuclear Power Plant
[End of figure]
Despite the progress achieved on the two construction activities, the
schedule for completing the new shelter--the third and most visible
construction component--has slipped by about 7 years. The 1997 SIP
established a preliminary schedule for completing the new shelter
construction in March 2004. However, by late 2006, the Chernobyl PMU
had extended the completion date to January 2011.[Footnote 12] The 1997
implementation plan had included unrealistic schedule assumptions. For
example, according to an EBRD official responsible for the Chernobyl
Shelter Fund (CSF), the SIP assumed the western contractors providing
project management (Bechtel International Systems Incorporated,
Electricité de France, and Battelle Memorial Institute) would be in
place immediately. However, this did not occur until early 1999, after
Ukrainian decrees were finally developed to support the project.
Specifically, in February 1999, the Ukrainian Cabinet of Ministers
issued a decree releasing contractors from civil liability for nuclear
damage, a prerequisite before contractors would consider working at
Chernobyl.[Footnote 13] Moreover, according to EBRD, the emergency
repair to the shelter in 1999 showed it would be impossible to do
significant work at the Chernobyl site without major investment in site
infrastructure. Major portions of the support facilities and
infrastructure, such as roads and water services, did not become
operational until early 2005.
In addition, according to EBRD, the SIP did not allocate sufficient
time for the technical and regulatory reviews and subsequent Ukrainian
government approvals. The review process added 2 years to the project's
schedule. PMU officials stated that other reasons contributed to
delays. They indicated the largest single delay was the start of the
conceptual design about 3 years after its original schedule. These
officials attributed the delay to the time needed after the breakup of
the Soviet Union to create a sufficiently mature Ukrainian
infrastructure--such as banking and legal systems--to support a
contract for the conceptual design. As a result of the unrealistic
assumptions and on-the-ground conditions, by July 2004, the project had
only advanced to the point of having the new shelter's preliminary
design, known as a conceptual design, approved by the Ukrainian Cabinet
of Ministers--about 3 months after the date that the SIP had forecast
completing construction of the new shelter.
An EBRD official told us, however, that the SIP was never expected to
provide a precise schedule because major project questions such as the
design for the new shelter had yet to be addressed. Moreover, the
official said that the SIP had established an artificial start date of
January 1997. According to an EBRD report, the project had a largely
defined scope and schedule by 2003. Nevertheless, we found that the new
shelter's completion date has continued to slip even after the new
shelter's design was significantly clarified and the schedule was
revised to reflect project refinements. As of late 2006, the scheduled
completion of the new shelter was more than 2 years later than
estimated in 2003.
Over the past couple of years, the primary reason for further schedule
slippages of the Chernobyl project has been the failure to award a
contract for the final design and construction of a new shelter. Until
this contract is awarded, the project cannot go forward. In 2003, the
PMU estimated that the contract for final design and construction would
be awarded in 2004. As of early July 2007, however, the contract has
not been awarded. As a result, the final design and construction of the
new shelter has not yet begun.
Several procurement-related problems have delayed the ontracting
process from the beginning. For example, the request for contract bids
was released in March 2004, which was about 2 months later than
forecasted at the time. In addition, the proposal submission deadlines
for both the technical and commercial evaluations of bids were each
extended over a month. Moreover, despite lengthy clarifications of
contract requirements with potential bidders, the two bidding
consortiums--one led by a U.S. firm CH2M Hill and another called
Novarka headed by a French firm--submitted proposals that did not
comply with the requirements. The noncompliant proposals tendered by
the two consortiums had to be resubmitted for consideration by the
proposal evaluation committee.
More recently, the likely awarding of the contract to the French-led
consortium as the lower bidder has created controversy, as Ukraine has
raised objections and CH2M Hill filed a bid protest with EBRD.[Footnote
14] The ChNPP director and an official from the Ministry of Emergency
Situations told us they believe the Novarka bid proposal contains
significant deviations from contract requirements, which runs contrary
to the majority view expressed in the proposal evaluation committee's
report.[Footnote 15] Ukraine began disagreeing with EBRD over the
selection process in March 2006 when Ukraine sought to reopen the
proposal evaluation process or restart the contracting process. In
response to a Ukrainian request to overturn EBRD's nonobjection to the
evaluation committee's report, a bank official refused, responding that
no new information had been provided for consideration.[Footnote 16]
When CH2M Hill filed a bid protest shortly thereafter, EBRD halted the
contracting process and initiated a 6-month investigation to ensure
that the contract processing had been conducted in accordance with EBRD
procurement rules. Based on its examination, EBRD concluded in
September 2006 that CH2M Hill's complaint could not be upheld and the
contracting process could continue. Then, Ukraine again raised
objections about the contracting process and its likely outcome. As of
May 2007, a PMU official told us that PMU and Novarka officials were
still negotiating open points about the Novarka proposal that must be
settled before the contract is awarded.
EBRD must certify the contract as being in accordance with bank
procurement rules and the ChNPP director must approve the contract
before it can be executed. However, based on our discussions with both
EBRD and the ChNPP director in October 2006, it was clear that
relations between both sides were extremely strained. For example, the
ChNPP director told us that the donors should not make additional
contributions to the shelter fund until contracting issues are
resolved. An EBRD official told us that the bank would consider
withdrawing from administering the project if the assembly of
contributors approved Ukrainian proposals that conflict with EBRD
procurement rules. However, in May 2007 an EBRD official told us that
relations with Ukrainian officials have been gradually improving.
Officials from several donor governments told us they were growing
increasingly concerned about the delays in awarding the contract for
the new shelter's final design and construction. European Commission
officials asserted that the donors were losing patience with the
project and that it was becoming more difficult to justify continued
financial support. The officials noted that the European Commission had
to convince its approximately 400 million taxpayers that their
investment was worthwhile. Given the growing concerns over costly
delays, State officials said that the overarching need is the timely
completion of a fair and transparent contracting process, regardless of
which qualified bidder is selected. In their view, it is important to
keep the project moving forward to demonstrate that all parties
involved are serious about completing the new shelter as expeditiously
as possible.
Frequent Project Leadership Changes, Management Difficulties, and
Technical Uncertainties Have Delayed and Could Further Delay the
Completion of the New Shelter:
In addition to the problems associated with awarding the new shelter
contract, several factors have also contributed to schedule slippages
and threaten to further delay the project even after the contract is
awarded. These factors include (1) frequent changes in the Ukrainian
leadership responsible for the project, (2) overall project management
complexity, and (3) technical uncertainties associated with
constructing the new shelter.
Lack of Stable Project Leadership:
Frequent project leadership changes have created, and could continue to
create, schedule delays. For example, ChNPP directors are politically
appointed and responsible for major Ukrainian decisions for the
Chernobyl Shelter Project, including approving the construction
contract for the new shelter. In the last 6 years, there have been four
ChNPP directors, the latest appointed in mid-2005. According to a
senior PMU official, the frequent changing of ChNPP directors created
delays because the project had to adjust to accommodate each director's
new approach to implementing the project. Furthermore, the project was
stalled for months in 2005 as a result of a major Ukrainian government
reorganization following a presidential election that shifted authority
over ChNPP from the Ministry of Fuel and Energy to the Ministry of
Emergency Situations.
Two former high-ranking Ukrainian officials told us that the changes in
leadership have had a negative impact on the Chernobyl Shelter Project.
A former official from the Ministry of Fuel and Energy told us the
change was disruptive to the shelter project's progress because the
Ministry of Emergency Situations wanted to revisit past project
decisions and no personnel from the Ministry of Fuel and Energy were
transferred to the newly responsible ministry to maintain continuity of
expertise. Similarly, the former head of Ukraine's regulatory
organization asserted that the recent change in government resulted in
the loss of many capable regulatory officials who had institutional
knowledge of the project. As a result, some past decisions were
overturned and many new questions were being raised about regulatory
matters that had been previously addressed.
The possibility of continuing leadership changes creates uncertainties
for the project's schedule. According to a senior PMU official, the
current project schedule does not account for the risks of delays
arising from political leadership and policy changes--not because such
risks do not exist but because they are difficult to assess. EBRD has
indicated that sustaining high-level Ukrainian government attention and
a stable institutional environment is particularly crucial in this
project phase, where any delay is costly. EBRD established the
Ukrainian and EBRD Joint Committee in 1998 to promote government
attention and to ensure that Ukrainian policies and institutions
support the project's progress. Over the years, the joint committee has
addressed various project issues requiring Ukrainian government
actions, including tax and customs exemptions and Ukrainian
contributions to the project. However, the joint committee has had
mixed experiences in maintaining good cooperation. According to an EBRD
official, the joint committee has been effective at creating some
periods of good cooperation with the Ukrainian government, including
occasions when the Ukrainian president has intervened to resolve
project issues. However, frequent changes in Ukrainian officials have
made it hard to maintain the continuity of the joint committee and to
schedule meetings. An EBRD official told us that political and
institutional instability has had a crucial impact on the progress of
the project. He said that since 1998 the bank has worked with nine
Ukrainian ministers involved with Chernobyl, eight vice prime
ministers, six prime ministers, and an even higher number of deputy
ministers or officials in charge of the ChNPP.
Complex Project Management Structure:
A second risk to the schedule is the complex nature of the Chernobyl
Shelter Project's management structure, which has slowed decision
making.[Footnote 17] There are many organizations that impact the
project's performance--including the assembly of contributors, EBRD,
the western contractors, the PMU, ChNPP, as well as Ukrainian
ministries and regulators. Numerous officials from these organizations
told us that the multiple organizations involved in the project creates
a cumbersome structure that has made it difficult to reach timely and
unanimous agreement on project decisions. From the PMU managing
director's perspective, although the PMU structure provides EBRD and
the donors with transparency for shelter fund spending, it involves
more time-consuming accountability for even minor expenditures than he
has experienced on other international construction projects. For
awarding a contract, a series of steps, each of which can take a week
or longer, must be completed. EBRD must provide nonobjections to the
PMU on the contract request, on the contractor selection, and for
signing the contract. In addition, contracts must be approved by the
ChNPP director, which can also be time consuming. The PMU managing
director also noted that decision making is also complicated because he
must obtain concurrence from both EBRD officials and the Chernobyl
plant director. This can prove difficult because the PMU serves both
clients and must sometimes resolve contradictory directions from the
two project participants.
A root cause of the management difficulty we identified is the
unresolved issue of how much control the PMU should have in managing
the project on behalf of the ChNPP. In 2002 and 2005, independent
audits contracted by EBRD concluded that the ChNPP manager's efforts to
exert greater control over the PMU led to inefficient decision making
and project delays. Those efforts had negative effects because ChNPP
management became overly involved in detailed project decisions or
duplicated PMU reviews before approving decisions. ChNPP officials told
us that a plant work group was established to review decisions made by
the PMU. They view this duplication of effort as necessary because the
decisions prepared by the PMU for the ChNPP director's approval do not
always reflect the full interests of the plant.
Ukrainian ministerial and ChNPP officials told us they want greater
control over the PMU--and the shelter project in general--rather than
having the PMU managed by a western consultant, as is specified under
the ChNPP's current contract with the consortium of consultants from
three western companies. A senior official at the Ministry of Emergency
Situations told us that there were too many western consultants in
senior management positions in the PMU. He asserted that Ukraine should
be treated like an equal partner in the project because Ukraine is
legally responsible for the project and thus ultimately responsible for
the safety of the site once the shelter is completed.
In contrast, EBRD believes that the current management arrangement
corresponds with shelter fund agreements and reflects the findings of
the two management audits, which recommended against more intervention
by ChNPP management into PMU operations. In EBRD's general model for
administrating funds, western consultants ensure the PMU has the
necessary management, procurement, financial, and other skills. EBRD
has described Ukrainian proposals to assembly members as marginalizing
the important role of western consultants. However, changes to the PMU
structure have been made as the result of recommendations in previous
audits. For example, the co-leadership in all PMU management positions-
-a western consultant and a Ukrainian manager for each position to
provide training for Ukrainian staff--was discontinued to speed up
decision making. Currently, about half of the PMU management positions
are filled by Ukrainian managers developed under the earlier co-
leadership structure.
In October 2006, the assembly of contributors requested an update of
the last management audit as a basis for determining whether further
management improvements are needed. The resulting May 2007 audit report
did not support ChNPP managers' proposal to restrict western
consultants' functions to mainly providing advice to ChNPP. Instead,
the audit recommended that the project should continue to be managed by
the PMU on behalf of ChNPP and that PMU functions and responsibilities
should be gradually transferred to Ukrainians as qualified candidates
are found.
Technical Uncertainties:
The Chernobyl Shelter Project faces a number of technical uncertainties
associated with constructing a one-of-a-kind structure at a highly
radioactively contaminated site. These uncertainties could contribute
to project delays. For example, the new shelter's final design will
require approval from Ukraine's regulatory agencies, including those
responsible for regulating nuclear materials and approving construction
projects. To avoid the delays that have occurred in past reviews,
Ukrainian law limits the duration of the regulatory review process for
the new shelter. However, licensing consultant officials who provide
support services to Ukraine's nuclear regulator under an EBRD grant
told us that the law requires only a review, and not approval, within
that duration. If the approval documents are of poor quality, such as
missing supporting information, or raise technical questions, then the
review process could be prolonged while the documents are revised and
resubmitted. Technical questions are particularly possible during the
review because the contractor may propose alternatives to meet the
technical requirements of the conceptual design. As a result, the
shelter's final design could be different from the conceptual design
that the regulator had already approved. Regulators may then require
additional time to review and clarify new design issues, which could
delay the authorization to begin construction on the new shelter.
Moreover, if unexpectedly large amounts of high-level radioactive waste
are found on site, work could be stalled while removal and storage
issues are resolved. According to the PMU's managing director, the main
concern is the amount of radioactive waste that may be uncovered during
the excavation for the new shelter's foundation. PMU officials report
that ChNPP is currently expanding its capacity for on- site storage of
high-level radioactive waste. Nevertheless, if the amount of high-level
radioactive material discovered during the construction of the new
shelter is higher than expected, the amount of waste may exceed the
limited available space for storing this material. According to another
PMU official, although the ChNPP is responsible for removing and
storing the high-level radioactive waste, these tasks would have to be
done in a timely manner in order to allow the new shelter contractor to
stay on schedule.
Estimated Costs to Complete the Project Are $1.2 Billion and Will
Likely Increase, and Final Costs Are Uncertain:
As of 2006, the costs to complete the Chernobyl Shelter Project were
estimated at over $1.2 billion and are likely to increase due to, among
other things, ongoing project delays. In 1997, a preliminary estimate
of $758 million was developed that excluded certain cost factors such
as reserve funds to provide for project uncertainties and risks, as
well as increased material and labor costs. Final project costs are
currently difficult to estimate because the most expensive project
task--the construction of the new shelter--has not started. Officials
from several donor governments are concerned that the costs of the
Chernobyl Shelter Project will exceed the current $1.2 billion
estimate. These concerns are based in part on their experiences with
other internationally funded construction projects, including ones at
Chernobyl, that have significantly exceeded original cost estimates.
Cost Estimates to Construct the New Chernobyl Shelter Have Increased
Since the Initial Estimate:
Current cost estimates to complete the Chernobyl Shelter Project total
$1.2 billion, which is higher than the preliminary estimate developed
about 10 years ago. The 1997 project estimate of $758 million was
prepared by international experts from Ukraine, the United States,
Europe, and Japan to provide a target amount for the international
pledging of funds. This estimate was preliminary because many project
decisions that impact costs, such as the number of stabilization
measures and the design for the new shelter, were not yet determined.
This initial estimate also excluded certain cost factors--such as
reserve funds to cover costs from project uncertainties and risks and
the escalation of materials and labor prices.[Footnote 18] When the PMU
estimated the necessary reserve funds in 2003, these cost factors added
$194 million to the project, bringing the total estimated cost to about
$1.06 billion. The estimate also rose because some work tasks were
added or expanded that had not been considered in the 1997 plan, such
as the removal and replacement of the vent stack adjacent to the
existing shelter and expanding the PMU's role through the end of the
project.
The estimate for total project costs was increased to $1.2 billion in
2006 by the PMU primarily because the estimate had to be reconciled
with the higher-than-expected bids submitted by the two competing
contractors in late 2005. The lower of the two bids for the new shelter
contract--about $505 million--was about $163 million higher than the
project's 2003 estimate for this work. In responding to contributors'
requests for an explanation of the increase, EBRD officials said that
prior cost estimates were based on the best available data at that time.
A PMU cost analysis indicated that the higher-than-expected contractor
bid was mainly attributable to the effect of price escalations and
different proposed methods for constructing the shelter. First, the
analysis indicated that almost half of the $163 million increase was
due to increases in material, labor, and other costs that had occurred
between 2003 and mid-2005 or were anticipated through the project's
completion. In particular, large price increases in steel and Ukrainian
labor--the latter costs having roughly tripled between 2003 and 2006--
contributed significantly to the increase in estimated costs. Second,
roughly another $50 million in costs was attributable to construction
approaches in the bid proposal that were different from those assumed
in the conceptual design. For example, the bid proposal's approach
required more expensive construction equipment than had been included
in the PMU's prior cost estimates. However, the rise in total project
costs between 2003 and 2006 was moderated by reduced cost estimates for
some other project tasks, including for stabilizing the existing
shelter.
According to EBRD and PMU officials, accurately estimating costs is
difficult because the most expensive component of the project--
constructing the new shelter--has not begun. In general, project cost
estimates become more precise as project designs that define contracted
activities are finalized, bids from firms competing for the contracts
are received, and a contract is awarded. As work under the contract
progresses, the adequacy of reserve funds becomes known, which
increases the level of certainty in project cost estimates until the
work and contract are completed and final costs are known. In the case
of the shelter project, a PMU official told us that completed and
ongoing contracts account for less than one-third of the estimated
project costs.[Footnote 19] Consequently, most of the project's
estimated costs hinge on future contracts. For example, the single most
expensive future contract is for the final design and construction of
the new shelter, currently estimated to cost about $505 million based
on the lower of the two bids.
Even if the Chernobyl shelter construction contract is awarded based on
this price, the final costs are uncertain because only about half of
the estimated costs will be associated with a fixed-price contract.
Under this fixed-price contract, the contractor is generally
responsible for paying any higher-than-anticipated costs.[Footnote 20]
For the remaining contracted activities, ChNPP bears some or all of the
risk for paying for higher-than-anticipated costs through the Chernobyl
Shelter Fund (CSF). Some of these costs will not be clarified until the
final design is completed. For instance, the design will finalize
specifications for the amounts of materials, such as the amount of
steel and concrete needed for the new shelter and its foundation.
Further, the final design will specify some types of equipment and
materials, such as the material used for the new shelter's internal and
external covering. Pricing for these materials at the time of
procurement is less certain because, although prices are assumed to
typically rise over time, the price can be increasing or decreasing at
any particular time.
Estimates Are Likely to Increase Due to Continued Delays in Awarding
the New Shelter Contract, and Additional Factors Could Also Increase
the Costs to Complete the Project:
The current cost estimate of $1.2 billion to complete the Chernobyl
Shelter Project will likely increase because of the costs of the
protracted delay in awarding the contract for the new shelter. In late
2006, a PMU official involved in estimating costs told us that he was
fairly confident that the cost estimate of $1.2 billion would be
sufficient to complete the project because it included reserve funds of
$161 million. He expected these reserve funds would provide a
sufficient buffer against the cost impacts of project uncertainties and
escalating prices for materials and labor. Around that time, EBRD
notified CSF contributors that costs were increasing with each day the
construction contract was delayed. The bank indicated, however, that
the delay had not yet affected the project's cost estimate, but the
available reserve funds were being eroded. The same PMU official told
us in March 2007 that, based on the protracted delay, the total
project's cost estimate would likely need to be increased by tens of
millions of dollars.
Also according to this PMU official, when the total cost estimate is
revised after the new shelter contract is awarded, it will likely
increase for the following three reasons:
* First, tens of millions of dollars will likely be needed to adjust
the contract costs for price escalations that have occurred. The
contracting process for the new shelter allows for adjusting costs to
account for changing prices of materials, fuel, and labor, and those
prices must be updated from the time of the bid submission in late 2005
to the time of contract award, expected in 2007.
* Second, the delay means a longer, and therefore a more costly,
operation period for the PMU. For example, the western consultants in
the PMU have been maintaining their staffing level recently in
anticipation of the new shelter contract being awarded. This staffing
level costs about $1 million per month.
* Third, the delay in awarding the new shelter contract also delays
other future project contracts and thereby raises their costs.
Specifically, contracts totaling an estimated $59 million, which are
primarily to support the deconstruction of the existing shelter after
the new shelter is in place, will probably be delayed. According to the
PMU official, delays are typically assumed to increase the estimated
costs at an escalation rate of about 3 percent per year.
Furthermore, a number of risk factors could increase the costs of the
Chernobyl Shelter Project. Many of these factors were identified by
donors to the shelter fund and PMU officials. Whether these factors
will result in increased project cost increases depends on whether the
revised estimate contains sufficient reserve funds. For example, a 2005
analysis by the PMU estimated the most likely costs of almost twenty
risks and uncertainties for the new shelter's design and construction,
which resulted in adding reserves of $51 million to the current
estimate. However, these risk estimates are based on experts' opinion
of probable outcomes and can vary significantly from the project's
actual experience.
The adequacy of the reserve funds also depends upon PMU officials'
ability to successfully mitigate the cost impacts of these project
uncertainties. PMU officials said they have a mitigation plan for
identified risks. A former PMU official told us the amount of cost
increases that could potentially be prevented could vary widely--from
zero to perhaps $100 million, depending upon the PMU's ability to
mitigate the risk. Mitigating project risks could be challenging,
particularly for potential events that are outside of the PMU's direct
control. For example, according to a PMU official, if Ukraine revises
regulations to require the new shelter to meet higher earthquake or
tornado standards, then the amount of steel required for the new
shelter--and the associated costs--would increase.
Other possible risks that could increase project costs identified by
CSF contributors and PMU officials include the following:
* Delays may occur in Ukrainian regulatory approval of the new shelter
design.
* The price of steel, fuel, or labor might escalate faster than
anticipated.
* The needed Ukrainian labor force may not be available in sufficient
numbers. Past medical screening for workers in high radiation areas
found about half were not in acceptable health due to smoking, bad
diet, ulcers, or other medical reasons. Also, ChNPP will have to find
additional dosimetrists, who measure radiation levels, for the
construction of the new shelter.
* The Ukrainian labor force may not be available at the costs
anticipated. PMU officials said the project has to pay premium wages to
attract construction workers to the Chernobyl site because the workers
prefer to work elsewhere and a building boom in Ukraine has heightened
competition for workers with other employers.
* The contaminated site exacerbates the question of whether a
sufficient number of qualified workers can be found. Workers at
Chernobyl must be replaced when they reach an annual radiation exposure
limit, as specified by radiation safety standards. Also, more workers
than anticipated might be needed if a partial collapse of the existing
shelter were to increase the level of radioactive contamination level
at the site.
* Safety infractions by workers could delay the project. In 2005, for
example, work was stopped when some workers were found to have internal
radioactive contamination because they were breaking safety rules, such
as smoking and eating in contaminated areas.
* Transporting about 1,500 workers to Chernobyl and processing their
access to the work site could create possible choke points that could
potentially delay work.
In addition, other risks and uncertainties associated with the
Chernobyl shelter, although beyond the scope of the current project,
could have long-term technical and cost implications. Specifically,
while Ukraine has responsibility for remediating the large quantity of
radioactive waste inside the destroyed reactor and maintaining the
site, it is unclear whether Ukraine has the resources to complete these
tasks. In the course of our technical evaluation of the Chernobyl
Shelter Project, we identified several activities that will have to be
addressed in the future--either by Ukraine or with continuing
assistance from other countries. Specifically, we found the following:
* The planned new shelter is just one part of an overall effort to make
the Chernobyl reactor site environmentally safe. The existing shelter
and the remains of the destroyed reactor must be dismantled and
decommissioned. Radioactive waste from the site will need to be placed
in both high-level and low-level storage locations. Until these
facilities are built with sufficient capacity, waste--both liquid and
solid--will have to be kept within the confines of the new shelter once
it has been completed.
* Ukraine will be responsible for dismantling the shelter. However, the
final design for the actual process for dismantling the existing
shelter is not complete. Furthermore, processes for keeping the
radioactive dust stable while the existing shelter is being dismantled
and limiting the impact of removing the roof of the existing shelter,
including possible radiation exposure, are only conceptual in nature.
Ukrainian experts told us they are concerned that removing the roof
could be risky in terms of the possible contamination levels present at
the time. These experts also noted that the technical challenges they
may face are not well known and the costs of completing this task
cannot be well quantified at this time.
* Although dismantling the existing shelter will remove the important
risk of the shelter collapsing, without a plan for dismantling and
removing the waste from the site, the risk of collapse and release of
radioactive materials will pass to the new shelter, which will be
constructed to confine--not contain--radioactive material. The new
shelter is designed to confine dust and keep the weather out, but it
will not serve as a radiation shield.
The international commitment to Chernobyl may not end with the
completion of the new shelter, and expansions of the project's scope
could be costly. For example, two donor officials noted that Ukraine
has regularly raised the issue of assistance in removing the
radioactive fuel within the shelter. This task is not within the
shelter project's scope, although the new shelter is intended to
facilitate Ukraine's ability to remove it in the future. A 1996 study
sponsored by the European Commission indicated that removing the
radioactive fuel could increase estimated project costs by about 45
percent to 100 percent. In commenting on a draft of this report, State
indicated its consistent position has been that the United States would
not agree to a scope expansion for the Chernobyl Shelter Project.
In addition, although Ukraine has agreed to fund the deconstruction of
the existing shelter, the donors are responsible for funding the
deconstruction design, equipment, and a radiological waste processing
building as part of the Chernobyl Shelter Project. However, the
undetermined scope of the deconstruction effort impacts the needed size
and cost of the radiological waste processing facility for packaging
the radioactive waste. Furthermore, there is a potential that
additional stabilization measures for the existing shelter will have to
be undertaken, which would raise costs. The Ukrainian regulatory agency
approved the limited number of stabilization measures subject to the
understanding that the new shelter would be completed on schedule, and
therefore future delays in schedule may create the need to implement
additional stabilization measures.
Other Internationally Funded Construction Projects Have Experienced
Significant Cost Overruns:
Officials from the United States, the European Commission, the United
Kingdom, and Ukraine expressed concerns that the Chernobyl Shelter
Project could follow the path of other internationally funded
construction projects, including ones at Chernobyl, that experienced
significant cost overruns. For example, a European Commission official
told us it is common knowledge that all large-scale construction
projects cost more than their original estimates. A United Kingdom
official said he could not remember an internationally funded project
that was completed under budget. Our own work in the area of large-
scale construction projects bears out these concerns. For example, we
have reported on the following recent instances of projects that have
significantly exceeded cost estimates and experienced schedule delays
and other construction-related problems:[Footnote 21]
˛ In 2004, we found that DOE estimates to build fossil fuel plants in
Russia to replace aging and unsafe plutonium production reactors were
likely to significantly exceed original cost estimates, possibly by
over $500 million.
* The United States has had difficulties with past major construction
projects in Russia, such as the Chemical Weapons Disposal Facility at
Shchuch'ye. Further, many of these projects have experienced dramatic
cost increases, significant delays, or other major setbacks. At
Shchuch'ye, for example, the estimated cost for the project increased
from about $750 million to over $1 billion.
˛ DOE's costs to finish the partially constructed Chernobyl heat plant,
which was needed to supply space heat to facilities to support the
decommissioning of the other Chernobyl reactors, rose significantly. In
1997, based on a cost estimate from an earlier European Commission-
sponsored study, DOE signed a cost-sharing agreement with Ukraine to
complete the construction of the heat plant. The cost-sharing agreement
stipulated that the United States would provide a maximum of $10.5
million to support the project. Subsequently, DOE found it necessary to
conduct extensive project assessments to better estimate the total
project's cost. Based on the assessments, DOE estimated the U.S. share
of the heat plant project to be $29 million to $30 million--rather than
the $10.5 million in the original agreement. Final U.S. costs were
$32.5 million when the project was completed in 2001. According to the
Pacific Northwest National Laboratory, which served as the project
manager for the heat plant, its team had to overcome tremendous
challenges to minimize schedule slippages and contain costs. The
challenges included delays in design approvals by various Ukrainian
agencies, delays in the purchase and delivery of various plant
components, and less than aggressive support for the schedule by ChNPP.
Ukrainian officials' concern with cost overruns is based on their
conclusions about problems with internationally funded projects at
Chernobyl. According to the ChNPP director, the Ministry of Emergency
Situations tasked him with identifying and eradicating the root causes
of the cost overruns and schedule delays occurring with all of the
Chernobyl projects. In addition to the shelter project, his subsequent
analysis covered three ongoing internationally funded projects that
support the decommissioning of reactor units one, two, and three. Table
1 indicates the international funding and purposes of the three other
projects, as well as the ChNPP director's data on schedule delays and
cost increases.
Table 1: ChNPP Director's Analysis of Schedule Delays and Cost
Increases for Other Internationally Funded Construction Projects at
Chernobyl, as of October 2006:
Project: Interim spent fuel storage facility;
Source of international funding: Nuclear Safety Account administered by
EBRD;
Project's purpose: To decommission reactor units one through three,
spent nuclear fuel must be removed from them. The interim spent fuel
storage facility provides a place to prepare the removed fuel
assemblies for storage and store them for up to 100 years;
Initial completion date (current estimated date): 2003; (no earlier
than 2010);
Increase from initial cost estimate to current cost: 39 percent[A]:
($85 million to $113 million; additional $150 million to $200 million
may be needed to complete project);
Project: Liquid radioactive waste treatment plant;
Source of international funding: Nuclear Safety Account administered by
EBRD;
Project's purpose: To support decommissioning, this plant is intended
to process liquid radioactive waste currently stored at Chernobyl. The
processing prepares the liquid for storage by transforming it into
solid waste;
Initial completion date (current estimated date): 2001 (2008);
Increase from initial cost estimate to current cost: 87 percent: ($22
million to 42 million);
Project: Industrial complex for solid radioactive waste management;
Source of international funding: Program through the European
Commission;
Project's purpose: Also to support decommissioning, this complex will
serve to manage solid waste generated by reactor operations, such as
radioactively contaminated metal, concrete, plastic, wood, and paper.
It will include a solid waste retrieval facility, a solid waste
processing plant, and a repository for the disposal of short-lived
radioactive waste;
Initial completion date (current estimated date): 2004 (2008);
Increase from initial cost estimate to current cost: 44 percent: ($42
million to $61 million);
Source: ChNPP.
[A] This contract included both dollars and euros amounts. When we
calculated it in only dollars using a 2006 exchange rate, the increase
was 33 percent rather than the 39 percent indicated by the director's
analysis. The differences may reflect the use of different exchange
rates, which fluctuate over time.
[End of table]
The ChNPP director concluded that these projects shared a common flaw
that led to delays and cost overruns--a contract combining design and
construction. He said this type of contract can result in a project
proceeding to construction with a faulty design that results in costly
changes during construction. Another ChNPP official, who had served as
the deputy project manager for the interim spent fuel storage project,
told us that a French company did not staff the project with the needed
experts to design the spent fuel storage facility. Moreover, to save
time and costs, building was begun before a final design was
completed.[Footnote 22] When the ChNPP officials questioned this
strategy, the contractor replied that they should not be concerned
because under the design and construct contract, the contractor had
ultimate responsibility for the project's success. Although ChNPP
officials were not provided with final design documents to review, they
finally recognized design deficits in the facility being constructed.
The contractor had designed the facility to hold mock fresh fuel rather
than real spent fuel, which takes on different dimensions during use.
As a result of the design flaws built into the interim spent fuel
storage facility, the project's estimated costs were about $28 million
over its original budget when physical work was suspended in 2003. The
facility--for which about $96 million has already been spent--is still
not operational. According to the ChNPP director, another $150 million
to $200 million is needed to modify or completely rebuild the facility.
Figure 5 shows the incomplete spent fuel storage facility at Chernobyl.
Figure 5: The Interim Spent Fuel Storage Facility at Chernobyl:
[See PDF for image]
Source: GAO.
[End of figure]
The Chernobyl director told us he is concerned that the construction of
the new shelter will experience the same cost increases and delays as
the other Chernobyl projects. One reason for his concern is that the
new shelter contract combines design and construction, as did the
contracts for the other three projects. Moreover, he stated that some
companies in the Novarka consortium are the same companies that failed
to complete the other Chernobyl projects on time and within budget.
Although they acknowledge that the interim spent fuel storage facility
project suffered from technical design flaws, insufficient project
oversight, and rising costs, EBRD and PMU officials told us the new
shelter contract was structured to avoid repeating these problems.
According to the PMU managing director, the bidding consortiums have
the technical capacity to successfully complete the project. The
proposal evaluation committee reviewed qualifications and designated
both bidding consortiums as technically qualified to fulfill the
contract. Moreover, despite combining design and construction tasks,
the new shelter contract requires the contractor to provide the full
scope of the design before construction begins, with the exception of
some site preparation. ChNPP officials will review the design and
either give preliminary approval or require it to be revised. After the
ChNPP officials preliminarily accept the design, it will be sent to the
Ukrainian regulators to determine whether it is compliant with
Ukrainian laws, rules, and regulations. Only after the regulators
authorize construction will ChNPP officials give approval to start
construction. In addition, the contract includes some incentives for
the contractor to minimize the new shelter's costs, such as optimizing
the design to limit the amount of needed steel and concrete.
State Has No Direct Management Responsibilities for the Chernobyl
Shelter Project but Has Played a Key Role in Providing Funding:
State, which is the lead U.S. government agency for the Chernobyl
Shelter Project, has no formal role in directly managing the project.
In addition, State's ability to control the project's activities is
restricted because all major decisions must be based on a consensus of
the assembly of contributors. However, State has had a key role in
funding the project, which may be more difficult in the future.
Appropriations to the FREEDOM Support Act, which provide U.S. funding
for the project, have been decreasing, and current pledges from all
donor governments and interest earned on the CSF are insufficient to
cover the current estimated cost of $1.2 billion. As a result, an
additional request for funding by the donors is likely. Because some
donor governments are not expected to increase their pledges beyond
what they have already provided, the United States and other donors
might be asked to contribute an even larger share of funds in the
future. Even though costs have been increasing and the project is
experiencing delays, State has not reported detailed information about
the project's status and cost estimates to Congress.
The State Department Relies on EBRD to Oversee and Manage the Project:
State does not have a direct management or oversight role on the
project and, similar to other contributors, depends on EBRD to oversee
and manage the CSF. State's role is defined by the international
structure of the project that was agreed to by the donors at the
beginning of the project. Responsibility for administering and
overseeing the CSF was assigned to the EBRD in 1997 by the donors,
limiting the United States and other donors' role. EBRD oversees and
manages the project, as specified in bank rules for the CSF and bank
agreements with Ukraine and ChNPP. Although the PMU has overall
responsibility for day-to-day project management, the PMU regularly
reports to EBRD on project progress and seeks its nonobjection for any
decision or change that might impact the project's cost or schedule.
Although State does not directly oversee and manage the project, the
agency seeks to exert influence, to the extent possible, as the lead
U.S. representative to the assembly of contributors. The assembly is
the formal interface between donor governments and the EBRD and
provides the forum for receiving official updates on the status of the
project and the CSF. The assembly also provides approval for contract
awards, major funding allocations and transfers, and any changes to the
CSF structure and rules. However, despite State's efforts, the assembly
structure makes it difficult for State to exert greater control
because, among other things, a consensus of the voting assembly members
is required for all major decisions.
State also seeks to address Chernobyl shelter issues by monitoring
developments that affect the project and works closely with the EBRD
and other donor governments to try to anticipate and resolve issues
affecting project performance. For example, State officials told us
they provided critical leadership for encouraging donor support during
the 2005 pledging event, and continue to work closely with EBRD and the
other G-7 governments to support the project.
A key aspect of State's role is to support the allocation of U.S. funds
to the CSF.[Footnote 23] These funds are provided as a grant and do not
contain any conditions on their use. The CSF rules prohibit donors from
specifying how their governments' payments will be spent on the
project. As a result, donor governments rely on EBRD to monitor project
expenditures and ensure that the funds are used to support legitimate
project objectives. In the view of State officials, the Chernobyl
Shelter Project does not differ from other multilateral nuclear safety
projects administered by EBRD. For example, State also donates funds to
the multilateral nuclear safety account that provides funding to
improve the safety of Soviet-designed nuclear reactors. That account is
also administered by EBRD, and State officials told us they cannot
place specific conditions on the use of the funds it provides. However,
State officials told us that establishing benchmarks that would link
any additional pledging of funds to specific progress in meeting the
project's performance goals would be a useful management tool. They
also noted that the other major donor governments would have to concur
and cooperate with such an approach for it to be successful.
Despite these limitations on its formal role in the project, State, in
concert with the U.S. Embassy in Kyiv, has taken steps to try to keep
the Chernobyl project moving forward. The U.S. Embassy plays a critical
role in monitoring the SIP progress and takes a lead in working with
the other major donor countries' embassies to engage Ukrainian
officials in resolving project issues. Additionally, within the
assembly of donors, State took the lead in identifying a strategy to
mediate an impasse between EBRD and Ukraine over the next steps in
awarding the contract for the new shelter. Specifically, at an October
2006 assembly meeting, State proposed the participation of four
observers, including one selected by Ukraine, to monitor contract
negotiations between the PMU and the Novarka consortium. This strategy,
which was adopted by the assembly, was designed to allow the
contracting process to proceed in accordance with EBRD procurement
rules, while encouraging greater Ukrainian trust in the process and
acceptance of its outcome.
Additional U.S. Funding Will Likely Be Requested to Complete the
Project:
Additional U.S. funding will likely be requested for completing the
Chernobyl Shelter Project because of an existing funding shortfall and
the likelihood of continued cost increases. According to a PMU analysis
in late 2006, a funding gap of about $190 million existed between the
total amount pledged by donors and the current $1.2 billion estimate to
complete the Chernobyl Shelter Project. Furthermore, the estimated gap
could change markedly because of the uncertainties in both the
project's estimated final costs and the available CSF funds, according
to EBRD and PMU officials.[Footnote 24]
Typically, the donors have committed additional funding through formal
funding conferences. To date, there have been three such conferences,
and the United States has pledged funds at all three of these
conferences. Table 2 shows the amounts pledged by the United States
since the inception of the Chernobyl Shelter Project.
Table 2: U.S. Pledges to the Chernobyl Shelter Project:
Year: 1997;
Pledge amount (millions): $78.
Year: 2000;
Pledge amount (millions): $80.
Year: 2005;
Pledge amount (millions): $45.
Year: Total; Pledge amount (millions): $203.
Source: State Department.
[End of table]
˛ Regardless of the potential amount of additional funding needed to
complete the project, the share of funding that will be requested from
the United States and other donors will likely increase because some
donors will not make any additional contributions. According to State,
United Kingdom, and European Commission officials, donor
representatives face a difficult task justifying to their governments
further contributions because of the ongoing delays in awarding the new
shelter contract, the lack of visible progress on the new shelter, and
the lack of a firm estimate for project costs.
˛ Officials from State and the United Kingdom also told us that they
anticipate many donors may not have the resources--or may no longer be
willing--to provide additional funds. Assuming the past patterns of
donations shown in figure 6, the loss of funds from some or all the 21
governments with smaller shares of the contributions could reduce
donations of additional funds up to 12 percent. If some G-7 countries
or the European Commission also decide not to provide additional
funding, then some of the remaining donors would have to provide
contributions at a significantly higher level than their historic
share. The signers of the 1995 memorandum of understanding regarding
Chernobyl--the G-7 countries (the United States, Canada, Japan, France,
Germany, Italy, and the United Kingdom), the European Commission, and
Ukraine--have provided the bulk, about 88 percent, of the total funding
for the Chernobyl Shelter Project. More specific data on the
percentages of donor governments' contributions can be found in
appendix III.
Figure 6: Chernobyl Project Contribution Agreements from the European
Commission, United States, other G-7 countries, Ukraine, and 21 other
countries, as of September 2006:
[See PDF for image]
Source: EBRD
Notes: Ukraine's contribution includes both cash and in-kind
contributions. Percentages do not total to 100 because of rounding.
[End of figure]
Officials from State and the United Kingdom told us that donors might
agree to provide additional funds if the prospects of the project's
successful completion appear more certain. According to a United
Kingdom official, his country would likely be willing to pledge more
money, but only when (1) it has confidence in the project's cost
estimates, which will not likely occur until the final design of the
new shelter is complete; and (2) it can expect its contribution to be
part of an international effort to pledge more. Similarly, a State
official told us that additional funding would be easier to justify if
the project was almost complete and only a small amount of additional
funding were needed.
Ultimately, political considerations may play a large part in donor
governments' decisions, including the United States', on whether to
continue funding the project. For example, according to a United
Kingdom official, donor governments want to avoid the negative
political attention from not assisting Ukraine in completing this
project. Further, he said that withdrawing support would be difficult
for some governments whose support is part of a broader foreign policy
objective.
Decreasing FREEDOM Support Act Funding Could Impact Future U.S.
Contributions to the Chernobyl Shelter Project:
To date, the United States has pledged $203 million to the CSF and has
contributed about $154 million ($169 million adjusted for inflation)
through 2006.[Footnote 25] State officials currently plan to allocate
about $20 million for each of fiscal years of 2007 and 2008 and $9
million for fiscal year 2009 to fulfill the remaining $49 million of
the total $203 million U.S. commitment. These payments of $49 million
may require State to reduce funding to other programs supported by the
FREEDOM Support Act because funding under the act has been decreasing.
Under the FREEDOM Support Act, State divides appropriations among many
programs--including efforts to halt the proliferation of nuclear,
biological, and chemical weapons--across the 12 countries covered by
the law, including Ukraine. Further, according to State's foreign
assistance coordinator for Ukraine, there is no alternative funding
source for CSF other than the FREEDOM Support Act.
˛ According to State officials, if the FREEDOM Support Act funds
continue to decline and if additional pledges beyond the $203 million
are requested, the United States could face three difficult funding
options:
˛ Maintain Chernobyl Shelter Project funding using a larger proportion
of the declining FREEDOM Support Act funds.
* Identify another funding stream. According to State officials, since
they have not been able to identify any alternative existing fund
source, State might have to approach Congress for a stand-alone
appropriation to provide the funds.
* Determine that the United States will provide no further
contributions beyond the $203 million pledged.
Since State may need to approach Congress for additional funding,
Congress will need more information than currently provided. State does
not provide Congress with detailed information on the project or its
financial requirements. State officials told us the department does not
notify Congress before pledging additional funds to the project but
makes all pledges subject to the availability of funds through the
congressional appropriations process. State does provide Congress with
a brief statement about its continuing financial support for the
shelter project in its annual congressional budget justification for
foreign assistance. For example, State's budget request documents for
fiscal year 2007 state that a higher proportion of FREEDOM Support Act
funds in fiscal year 2007 will go to the Chernobyl Shelter Project.
Although USAID provides Congress with more detailed background and
status information, its congressional notification memo is for the
purpose of initiating a payment to the Chernobyl Shelter Fund and not
for the purpose of identifying appropriation needs.
Conclusions:
In our view, it is in the interest of all the major participants
involved--including the United States--to see the Chernobyl Shelter
Project completed as soon as possible. However, tensions--particularly
between Ukrainian officials and EBRD representatives, and over the
project's lack of progress, its potentially higher costs, and
management difficulties--could result in further delays or even, in a
worst case-scenario, the termination of the project. Therefore, it is
incumbent upon all of the major participants to find a cooperative and
constructive path forward. Failure to advance this project--given the
condition of the existing shelter and the significant financial
investment made by the United States and others--is neither desirable
nor acceptable. We believe the United States--as the largest single-
country donor to the project--has an important role to play in
determining the outcome of the project. However, the U.S. financial
commitment should not be open ended. Thus far, the United States has
not placed conditions on the contributions made to the Chernobyl
Shelter Fund--that is, specific benchmarks tied to tangible progress
toward project completion--and it has not placed any caps or
limitations on future funding levels. In our view, without a set of
benchmarks linked to clearly defined project outcomes, the chances for
project success are diminished and the United States is left without a
clear idea of when, and at what cost, the Chernobyl shelter will be
completed.
We are also concerned that donors' confidence in the cost estimates
must be raised to ensure continued international support. Validations
of major cost estimate revisions would be one way to increase the
transparency of these estimates and donors' confidence in them. While
we do not question the expertise of the analyses that have been done so
far, it would seem reasonable to enlist the support of another
organization--outside the Chernobyl management structure--to undertake
an independent review. Given that EBRD has already contracted with
outside audit groups to review project management issues, there is
adequate precedent to pursue a similar course with respect to future
cost revisions.
For over a decade, the United States has shown a strong financial
commitment to completing the Chernobyl Shelter Project. However, total
funds pledged are insufficient to meet the project's current cost
estimates. Further, if additional money is needed--beyond the current
$1.2 billion forecast to complete the project--State may need to find
additional funding because funds provided by the FREEDOM Support Act
have been diminishing. Moreover, the need to rely on additional U.S.
funding to meet future shelter commitments may be exacerbated because
of the uncertainties surrounding continued financial support from other
donors. At the same time, the United States should consider the limits
to its commitment if the project does not show significant progress and
becomes excessively expensive. Assessing the project's progress and
total costs will be important before committing additional funds beyond
those already pledged, particularly after a more precise estimate of
total costs is developed following the completion of the final new
shelter design. As the project moves into the most expensive single
task of constructing the new shelter, legitimate concerns about further
schedule delays, cost increases, and funding gaps means that State
needs to provide more accountability and transparency over U.S.
contributions. To date, the information that State provides to Congress
does not give a full accounting of the status of the project, including
potential cost increases and delays. Since State may need to approach
Congress for additional funding, Congress will need more information
than currently provided through the department's annual congressional
budget justification for foreign assistance.
Recommendations for Executive Action:
To help ensure that the United States has a clear and consistent
strategy--as well as a sound basis for continuing to support the
Chernobyl Shelter Project--we recommend the Secretary of State, working
in consultation with other contributors and EBRD, consider the
following four actions:
˛ Establish specific performance benchmarks for the project that need
to be met before additional pledges of funds are made in the future.
˛ Periodically review and revise the benchmarks to ensure they are
relevant and applicable to the project's performance goals and time
frames.
˛ Obtain an independent validation of major revisions to cost estimates.
˛ Develop a contingency strategy for obtaining the additional funding
that may be needed to complete the project. The strategy should include
encouraging other major donor countries and the European Commission to
also contribute additional funding.
Furthermore, to increase State's accountability and transparency for
funding the project, the Secretary of State should provide a detailed
annual report to Congress about the status of the project, including
project costs, project milestones, and estimated completion dates.
Agency Comments and Our Evaluation:
We provided the Department of State and the U.S. Agency for
International Development (USAID) with draft copies of this report for
their review and comment. State's comments are presented as appendix IV
and USAID's are presented as appendix V.
In their written comments, both State and USAID generally agreed with
the draft report. Specifically, State noted that it provided useful
insights into the complex history and management of the Chernobyl
Shelter Project and acknowledged that devising a plan to meet a certain
funding shortfall was needed. Furthermore, State generally agreed with
our recommendations to help ensure that the United States has a clear
and consistent strategy and a sound basis for continuing to support the
Chernobyl Shelter Project. USAID concurred with our analysis that the
project has experienced significant delays and may face potential cost
increases.
However, both State and USAID raised some concerns about our
recommendation that State--working in consultation with other
contributors and the European Bank for Reconstruction and Development-
-establish specific benchmarks for the project that need to be met
before additional funds are made available for the project. Both
agencies asserted that linking the availability of additional funds to
specific performance benchmarks requires careful consideration because
it could lead to further project delays or increase costs. While
recognizing that benchmarks could provide a useful management tool,
State also noted that that the United States and other donors would
need to evaluate whether the benefits offset the potential negative
impacts. In addition, USAID asserted that our recommendation did not
clearly identify which funds would be subject to the benchmarks.
We strongly believe that our recommendations regarding the
establishment of performance benchmarks are prudent given the over 10-
year history of the Chernobyl Shelter Project that has been marked by
significant project delays and cost increases. In our view, performance
benchmarks would introduce additional rigor and discipline into the
Chernobyl Shelter Project, which can only help improve the project's
chances of success and reinforce contractor-related project milestones
and schedules. We agree, however, with USAID's point that our
recommendation should more clearly identify which funds should be
subject to performance benchmarks. We have clarified the recommendation
to indicate that additional pledges in the future should be benchmarked.
Although State concurred with our recommendation to obtain an
independent validation of major revisions to cost estimates, it
asserted that that the United States and other donors would need to
determine if the benefits of this validation offset the potential
delays and increased costs. We believe that an independent cost
validation could strengthen donors' confidence that the project costs
are realistic and achievable.
Although State agreed with our recommendation to provide a detailed
report to the Congress about the status of the Chernobyl Shelter
Project, it asserted that a two year reporting requirement--rather than
an annual cycle--should be implemented. We believe that the Congress
needs timely information about the project and think that an annual
report would be the most appropriate mechanism to achieve this.
Finally, State provided two technical points in its written comments.
First, State indicated its consistent position that the United States
would not agree to a scope expansion for the Chernobyl Shelter Project.
We have incorporated language in our report to reflect State's
position. Second, State disputes our statement that the U.S. government
costs for the Chernobyl heat plant rose significantly. As we note in
the report, DOE entered into this initial agreement with Ukraine for a
maximum U.S. contribution of $10.5 million. The final U.S. cost for the
project totaled $32.5 million--a significant increase from the initial
estimate.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies to the
Secretary of State, the Acting Administrator of the Agency for
International Development, interested congressional committees, and
other interested parties. We will also make copies available to others
on request. In addition, the report will be available at no charge on
the GAO Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please
contact me at (202) 512-3841 or aloisee@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions to
this report are listed in appendix VI.
Sincerely yours,
Signed by:
Gene Aloise
Director, Natural Resources and Environment:
[End of section]
Appendix I: An Analysis of the Chernobyl Nuclear Power Plant Accident;
This appendix provides technical information about the root causes and
impacts of the Chernobyl Nuclear Power Plant (ChNPP) accident that
occurred in April 1986.
There is little controversy as to whether the accident at the unit four
reactor of the Chernobyl Nuclear Power Plant on April 26, 1986, still
stands as the worst nuclear accident in history. The exact reasons for
the accident may not ever be fully known, as the primary source of
evidence--the reactor itself--was destroyed, and the remaining evidence
is still being interpreted. However, the failures that led to the
explosion and resulting fire at the ChNPP unit four reactor fall into
two categories: (1) system design weaknesses and (2) the numerous
overrides of safety systems and violations of both written protocols
and general principles, such as not operating a reactor outside of its
licensed design parameters. Ironically, the accident at Chernobyl
occurred outside normal operation of the reactor during a test designed
to assess the reactor's safety margin in the event of a loss of
electricity from the external power grid. The test protocol required
less than full reactor power and was scheduled just prior to a routine
shutdown of the reactor.
Nuclear Reactors:
In most electric power plants, water is heated and converted into
steam, which drives a turbine-generator to produce electricity. Fossil-
fueled power plants produce heat by burning coal, oil, or natural gas.
In a nuclear power plant, the fission[Footnote 26] of uranium[Footnote
27] atoms in the reactor provides the heat to produce steam for
generating electricity.
Several commercial reactor designs are currently in use in the United
States. The most widely used design consists of a heavy steel pressure
vessel surrounding a reactor core.[Footnote 28] The reactor core
contains the uranium fuel.[Footnote 29] The fuel is in the form of
cylindrical ceramic pellets about one-half inch in diameter that are
sealed in long metal rods called fuel rods. The rods are arranged in
groups to make a fuel assembly. A group of fuel assemblies forms the
core of the reactor.
Heat is produced in a nuclear reactor when neutrons[Footnote 30] strike
uranium atoms and cause them to fission in a continuous chain
reaction.[Footnote 31] Control elements[Footnote 32] made of materials
that absorb neutrons, are placed among the fuel assemblies. When the
control rods are pulled out of the core, more neutrons are available
and the chain reaction speeds up, producing more heat. When they are
inserted into the core, more neutrons are absorbed, and the chain
reaction slows or stops, reducing the heat.
Most commercial nuclear reactors in the United States use ordinary
water to slow down, or "moderate," the neutrons that maintain the
fission process. These are called light water reactors. In this type of
reactor, the chain reaction will not occur without the water to serve
as a moderator. The water also serves to remove the heat created by the
fission process. In the United States, two different light water
reactor designs are currently in use, the Pressurized Water
Reactor[Footnote 33] and the Boiling Water Reactor.[Footnote 34]
The nuclear fission reactors used in the United States for electric
power production are classified as "light water reactors" in contrast
to the "heavy water reactors" used in Canada. Light water (ordinary
water) is used as the moderator in U.S. reactors as well as the cooling
agent and the means by which heat is removed to produce steam for
turning the turbines of the electric generators. The use of ordinary
water makes it necessary to do a certain amount of enrichment of the
uranium fuel before the necessary criticality of the reactor can be
maintained.
The Reactor Design:
The ChNPP unit four reactor is a Soviet-designed RBMK (reactor bolshoy
moshchnosty kanalny, or in English, high-power channel reactor). The
RBMK is a pressurized water reactor with individual fuel channels that
uses ordinary water (as opposed to heavy water) as its coolant and
solid graphite (a form of carbon), a very pure form of the same
graphite found in pencils, as its moderator. Its design is derived from
the original reactor design of Enrico Fermi that initiated the first
sustained and controlled nuclear fission chain reaction under Stagg
Field at the University of Chicago on December 2, 1942. This use of a
graphite moderator and water coolant is found in no other nuclear power
reactors and makes the reactor unstable at low power levels, which
greatly contributed to the unit four accident.
The RBMK reactors were favored by the former Soviet Union primarily
because, in addition to producing both power (electricity and heat) and
plutonium (as do all thermal fission reactors that have U-238 in their
fuel matrix), they were able to be refueled while the reactor was still
running and not shutdown. This ability was important to the Soviet
Union's national security.
Fission reactors, including the RBMK at Chernobyl, contain fuel rods.
Unit four at Chernobyl used zircaloy tubes 3.65 meters long filled with
pellets of enriched uranium (U-235) oxide. The fuel rods were combined
into cylindrical assemblies (10 meters long) in a carriage, 2 sets of
18 rods per assembly. To allow the reactor to be refueled while still
operating, the assemblies could be physically put in and taken out of
the reactor by a mechanical lift. These assemblies were in individual
fuel channels, cooled by the pressurized water. The channels were
within graphite blocks, which acted as the moderator. A moderator slows
down fission neutrons, thereby allowing the fission chain reaction to
continue. Also, mixed helium and nitrogen gas increased the graphite's
heat transfer. Boron carbide control rods, which also absorb neutrons,
were inserted into the core to (1) control the rate of fission; (2)
maintain an even distribution of energy across the entire reactor; and
(3) allow automatic, manual, and emergency control. Detectors inside
the core monitored for any deviation from the reactor's normal
operations and would indicate whether the control rods should be
engaged to reduce or stop the fission reaction. Some of the control
rods would always be engaged during normal reactor operations. The
entire reactor core is housed in the concrete reactor vessel that
served as a radiation shield and had a steel pile cap that also
supported the fuel assemblies.
All RBMK reactors, such as the ChNPP unit four, have a positive void
coefficient, which results in the reactors being unstable at low power
and having a tendency toward power surges. Other reactor designs have
positive void coefficients as well, but they, unlike the RBMKs, have
compensating design features to maintain stability. A void coefficient
can occur in any water-cooled reactor. A void is a pocket of steam that
forms in a water channel. The more steam that is created, the more
voids that form; the more voids that form, the more the reactor
operation varies, because steam is not an efficient coolant and can
neither serve as a moderator nor neutron absorber. Water can serve all
three functions: cooling, moderating, and neutron absorption. A
positive void coefficient means that the excess steam increases power
generation, and a negative void coefficient means that the excess steam
decreases power generation. RBMK reactors have a high positive void
coefficient; this means that the power generation can increase rapidly
and, as a result, generate more steam, which in turn increases the
power generation in an ultimately uncontrollable process. This process
cycle can occur very quickly, as was seen at Chernobyl, where the
reactor power peaked at a hundreds of times its normal, full-power
rating. The reason for the high void coefficient in the RBMK reactors
is that the moderator (graphite) and the coolant (water) are in
separate channels. As the steam increases, the reactor gets hotter, but
the moderator is unaffected by the steam, and the fission reaction
continues. In fact, since the neutron-absorbing capacity of the water
is an operating characteristic, the increased amount of steam increases
the number of free neutrons, which increases the fission reaction.
Moreover, the graphite itself is a design weakness in that, while being
more efficient for weapons making and a fairly effective moderator, it
does not endure extreme temperatures very well. Graphite, which is
carbon based, will burn in the core if it is exposed to air. If the
graphite burns, the neutrons will hit at a greater velocity, causing
more heat to be produced. Great care must be taken to keep air away
from the core. Additionally, there was no containment vessel at the
Chernobyl plant. In all U.S. nuclear power plants, there is a mandatory
cement and steel reinforced containment "bubble" covering the core and
other components. Unit four had a pressure seal designed to keep the
pressure in, but no containment vessel in case of an explosion.
Containment structures are intended to withstand and contain the energy
and material released from a reactor during an accident or incident.
These materials could include radioactive gases (such as xenon and
krypton), volatilized fission products and other elements, and solid
material ejected from the core in the event of a full-scale core
excursion. A core excursion could include, for example, a melt- down
and loss of reactor vessel or primary system integrity.
Finally, as will be explained in the next section, there were errors in
operating the reactor, including inadequate knowledge of the reactor
characteristics, and ignorance or avoidance of operating regulations,
beginning with the nonroutine operation of the reactor.
Safety Margin Test of the ChNPP Unit Four Reactor:
Nuclear power plants need electricity. While the reactor generates
power, the various systems that support the reactor operation need
power from outside the plant. Thus, these systems need backup power in
order to function should the outside power source be interrupted.
Backup power can come from at least two sources: (1) the reactor itself
can be used to provide this power and (2) backup generators can serve
as an alternative power source. Problems arise if the reactor is not
producing power--as was the case at Chernobyl, since it was in the
process of routine shutdown--or if the time lag between power loss and
generator startup is too long. The ChNPP safety margin test was
designed to test this time lag. The reactor's power level was to be
lowered to see whether the turbine itself would have enough residual
inertia to pump coolant through the rector core, in combination with
the existing coolant convection, until the backup generators started
and provided electricity.
The test preparation sequence began almost 24 hours prior to the
accident, at approximately 1 a.m. on April 25, 1986. The reactor's
power level was gradually reduced to 1600 MW(t) by 2 p.m. the same day.
This level was maintained until 11 p.m. During this period, the
emergency core cooling system was isolated so that it would not
interfere with the test. This did not directly contribute to the
accident but could have reduced its impact. The power level was lowered
again starting at midnight, April 26, and about 30 minutes later, the
reactor was at 700 MW(t), which is now understood to be the minimum
safe operating level for an RBMK due to the positive void coefficient.
The reactor was then reduced to 500 MW(t), at which point, either due
to human error or system failure, the reactor did not hold at its
required level and dropped quickly to 30MW(t). In response, the
operator tried to restore power by pulling out some of the control
rods. Although it is not known exactly how many control rods remained
in the reactor, there is general agreement that the number left was
less than 26 and would have required the chief engineer's approval for
continued operation. By 1 a.m. on April 26, the reactor power was up to
200 MW(t). During the next 20 minutes, additional pumps were engaged to
increase water flow to the reactor core, which decreased the water
level in the steam separator. The automatic trip systems were
disengaged in order to continue reactor operations. The feed water flow
was increased to counter the problems in cooling. Some manual control
rods were retracted, which may have reduced the number of control rods
below the minimum effective number. The feed water flow was reduced to
increase the steam separator water level, but this also decreased the
core cooling, which caused steam generation in the core. All evidence
suggests that the reactor indicators showed that it was stable,
although in an abnormal operation state.
Thus, the actual test began at approximately 1:23 a.m. on April 26,
1986. The feed valves for the turbine were closed to make the turbine
continue under its own inertia. Automatic control rods were lifted to
counter the reduced reactivity due to the valve closures. This did not,
however, decrease the volume of steam as expected. The steam generation
increased, which, due to the positive void coefficient, increased
power. The steam continued to increase unabated. The reactor operator
engaged the control rods, which, due to their inefficient design,
concentrated the reactivity in the bottom of the core. The reactor
power rose to approximately two orders of magnitude greater than the
reactor was designed for, which resulted in the fuel pellets
fracturing, producing a pressure wave as the fragments reacted with the
cooling water rupturing the fuel channels. This was followed by two
explosions, the first of steam, and the second of fuel vapor that
lifted the pile cap, introducing air that turned into carbon monoxide
as it reacted with the graphite. Finally, the carbon monoxide ignited,
starting a reactor fire. This entire sequence took approximately 24
hours; however, the time from test initiation to explosion took
approximately 1 minute. The fire was eventually put out after tons of
materials were dropped on the reactor and after many lives were lost.
Regarding the release of radionuclides, an International Atomic Energy
Agency (IAEA) report has a sobering summary. The report noted that in
the initial assessment of releases made by the Soviet scientists and
presented at the IAEA Post-Accident Assessment Meeting in Vienna, it
was estimated that 100 percent of the core inventory of the noble gases
(xenon and krypton) was released. In addition, between 10 percent and
20 percent of the more volatile elements of iodine, tellurium and
cesium were released as well. The early estimate for fuel material
released to the environment was 3 percent, plus or minus 1.5 percent.
This estimate was later revised to 3.5 percent, plus or minus 0.5
percent. This corresponds to the emission of 6 tons of fragmented fuel.
According to IAEA, the accident resulted in more than 5 million people
living in areas of Belarus, Russia, and Ukraine that are classified as
"contaminated" with radionuclides (above 37 kBq[Footnote 35] per square
meter of cesium-137). Among them, about 400,000 people lived in more
contaminated areas--classified by Soviet authorities as areas of strict
radiation control (above 555 kBq per square meter of cesium-137).
There are wide-ranging estimates from various organizations about the
death toll from the Chernobyl accident. According to IAEA, the World
Health Organization, and Greenpeace, people did die at Chernobyl and
people will continue to die from the effects of Chernobyl. This, when
coupled with the vast contaminated areas of the former Soviet Union,
makes Chernobyl the worst nuclear accident in history.
[End of section]
Appendix II: Objectives, Scope, and Methodology;
This report (1) assesses progress in an internationally funded project
to construct a new shelter over the damaged reactor at the Chernobyl
Nuclear Power Plant in Ukraine and factors that impact the completion
of its construction, (2) reviews the cost estimates to complete the
project, and (3) assesses the U.S. role in overseeing the project and
in funding it through the Chernobyl Shelter Fund (CSF).
To address these objectives, we conducted fieldwork in the United
States and internationally. In the United States, we focused our review
primarily on the Department of State (State) in Washington, D.C., since
it is the lead U.S. agency for overseeing and funding the project. We
also contacted officials and reviewed documentation from the U.S.
Agency for International Development (USAID) in Washington, D.C., which
administers the U.S. payments to the CSF. For historical and background
perspectives, we met with officials from the U.S. Nuclear Regulatory
Commission in Rockville, Maryland, and the Department of Energy in
Washington, D.C., agencies which had more predominant roles in earlier
phases of the Chernobyl Shelter Project. In addition, we coordinated
with representatives from the U.S. Treasury Department, which is the
federal agency that has oversight responsibilities for the European
Bank for Reconstruction and Development (EBRD). EBRD, which is located
in London, is a multilateral bank that, among other things, administers
the CSF. We also met with officials from Bechtel International Systems
in Frederick, Maryland, and Battelle Memorial Institute in Richland,
Washington. These two organizations are part of a consortium of three
western companies that provide staff to the project management unit
(PMU) responsible for the day-to-day implementation of the Chernobyl
shelter project.[Footnote 36]
As part of our international fieldwork, during an October 2006 visit to
London, we interviewed EBRD officials as well as the United Kingdom's
representative to the assembly of contributors, a body that acts like a
board of directors for the CSF. In June 2006, we met in Brussels,
Belgium, with officials from the European Commission, which also has a
representative on the assembly of contributors and is the single-
largest contributor to the CSF. We also met with International Atomic
Energy Agency (IAEA) officials in Vienna, Austria, to discuss the
background of the project. In July 2006, we interviewed an official
from Russia's Ministry of Atomic Energy (Rosatom) to obtain Russia's
views about the project. During October 2006, we met with current or
former Ukrainian government officials in Kyiv, Slavutych, and the
Chernobyl site in Ukraine. These officials represented the State
Nuclear Regulatory Committee of Ukraine, the Ministry of Fuel and
Energy, the Ministry of Emergency Situations, the Accounting Chamber of
Ukraine, the Ministry of Foreign Affairs, and the Chernobyl Nuclear
Power Plant (ChNPP). At the Chernobyl site, we observed the
deteriorating existing shelter that is scheduled to be replaced and
interviewed the ChNPP director and his managers, as well as PMU
officials. In Kyiv, we also met with U.S. embassy officials, including
the ambassador, an EBRD representative, and a contractor assisting the
State Nuclear Regulatory Committee of Ukraine with regulatory reviews
of project documents.
To examine the Chernobyl shelter project's progress toward completing
the new shelter and factors impacting its completion, we reviewed
various project documents and interviewed knowledgeable officials from
EBRD, PMU, State, the United Kingdom, and the European Commission.
Specifically, we obtained and reviewed 1997, 2003, and 2006 project
schedules; EBRD's Project Progress Reports and other intermittent
reports; PMU reports, including its 2005 analysis of risk areas for
completing the new shelter; and the 2002 and 2005 independent audits of
the PMU.
We generally had access to all needed information to assess the
project's progress and factors impacting it. However, there were
certain access limitations pertaining to our review of the delays
related to the award of the new shelter construction contract. Since
the contracting process is treated as confidential under EBRD
procurement rules until the contract is awarded, we were not able to
examine the bid proposal documents and their evaluations, the bid
protest and its evaluation, or the open points in the bid proposal that
were being negotiated during our work. However, we were able to examine
relevant public documents related to the contracting process, such as
the materials presented to the contractors to aid their preparation of
proposals. Also, we were able to interview EBRD, PMU, Ukrainian, and
State officials about the status of the ongoing contracting process.
To review the cost estimates to complete Chernobyl shelter project, we
obtained cost estimate summaries and discussed these estimates with
officials from EBRD, the PMU, and ChNPP as well as officials from
State, USAID, Ukraine, the United Kingdom, and the European Commission.
To examine the history of the project cost estimates, we obtained and
analyzed the original 1997 estimate developed by a team of
international experts, PMU estimate summaries from 2003 to the present,
and PMU reconciliations of estimates with prior ones. In March 2007, we
requested and received from a PMU cost analyst an update on cost
estimates, which provided information on the likelihood of a higher
cost estimate as the result of delays in awarding the new shelter
contract. In addition, we examined a 2005 PMU probability analysis that
quantified the cost impact of about 20 risks for the construction of
the new shelter. We also discussed the risk of further cost increases
with PMU officials and CSF contributors. For the ChNPP director's cost
analysis of three other internationally-funded Chernobyl projects, we
confirmed the cost amounts either with an EBRD official or through a
European Union document. We also reviewed GAO reports that provided
examples of other internationally-funded construction projects that
experienced significant cost overruns.
We judged that the project cost estimates were sufficiently reliable
for the purposes of this report. We did not test the reliability of the
price data used in the project cost estimates because we did not have
access to the underlying data. However, we did judge that the cost
estimating methodology used by the PMU analysts was reasonable. We
reviewed the PMU's cost-estimating methodology using generally accepted
cost-estimating principles[Footnote 37] and discussed the methodology
and the analyses with PMU officials responsible for developing the cost
estimates. On this basis, we believe that Bechtel's estimates are
sufficiently reliable for the purposes of this report as estimates of
the project's potential cost. Further, we did not assess the project
cost estimates' accuracy, which can only be definitively determined in
the future after final project costs are known. However, we note in the
report that the cost estimates may diverge from the project's final
costs due to price escalations of materials and potential project
risks, among other factors.
To assess the U.S. role in overseeing and funding the project, we
interviewed State and USAID officials and obtained and analyzed
documentation from them. In addition, we examined EBRD's CSF rules, its
most recent Project Progress Report with CSF financial data, and other
bank and PMU documents that described the roles of EBRD or the assembly
of contributors. We also discussed the roles of contributors with
assembly representatives from the United Kingdom and the European
Commission. To examine State's efforts to monitor the project, we
reviewed pertinent cables and related documents exchanged between State
representatives in Washington, D.C., and U.S. embassy officials in
Ukraine. Finally, to understand the information about the shelter
project provided to Congress, we reviewed State's annual congressional
budget justifications for foreign assistance and USAID's most recent
congressional notification of payments to CSF.
In the report, we present CSF financial information as of September 30,
2006, in U.S. dollars. Because the EBRD reports CSF amounts in euros,
we converted these amounts into U.S. dollars using the average exchange
rate for the third quarter of 2006, as reported by the International
Monetary Fund. We used the third quarter of 2006 because the most
recent EBRD report cites CSF financial information that falls within
that period. This adjustment may not account for relative price changes
between the date on which countries made their contributions and the
third quarter 2006. However, to provide an inflation-adjusted amount
for the total U.S. contribution, we adjusted the U.S. contributions
that occurred in different years for inflation using a gross domestic
product price index, with a base year of 2006 (third quarter). This
adjustment makes the U.S. contributions from different years comparable
in terms of purchasing power.
To present the portions of contributions from the United States and
other fund providers, we calculated percentages based on EBRD's data
for contribution agreements in euros as of September 30, 2006. In
addition to payments, contributions agreements may include formal
commitment of funds that have not yet been paid into the CSF. For
example, the U.S. commitment agreement amount, which totaled about $154
million in nominal dollars, included about $34 million that the United
States had formally committed for payment to EBRD but had not yet paid.
In contrast, the contributions agreement amounts exclude pledges to the
CSF that have not been formalized. For instance, the United States'
2005 pledge of $45 million is excluded from the contribution agreement
amount because it had not yet been formally committed for payment.
Finally, some reported contribution amounts are affected by CSF
accounting rules, which require contributions in non-euro currencies to
be recorded in euro equivalents at historic exchange rates. The dollar
amount of the U.S. commitment agreement was thus recorded in euros at a
single historic exchange rate, regardless of exchange rates at the time
of past or pending U.S. payments.[Footnote 38] According to an EBRD
official, this reporting of the financial data is in line with the
provisions of the CSF rules and provides the most accurate overview of
donor commitments at any given time.
To assess the reliability of the project fund data for the purposes of
this report, we reviewed the required CSF financial controls and two
external audits of the fund. CSF rules require certain control
mechanisms for accounting for the funds. Specifically, the assembly of
contributors should approve the annual budget and financial statements
of the fund, and the financial statements of the fund should be audited
by internal and external auditors of EBRD. It was not our objective to-
-and we did not--audit the completeness or accuracy of CSF financial
statements. However, we examined the external auditor's reports for
2003 and 2004 and found that both expressed the opinion that the
financial statements were fairly presented and properly prepared. In
addition, we corroborated the amount of U.S. contributions to CSF
presented in EBRD data by confirming it with officials at State and
USAID and reviewing USAID payment documentation. For these reasons, we
believe the fund data is sufficiently reliable for the purposes of this
report.
In the report, we describe Ukrainian laws based on secondary documents,
officials' descriptions, or translated copies. However, we did not
independently verify descriptions of Ukrainian law.
We performed our review from May 2006 through June 2007 in accordance
with generally accepted government auditing standards.
[End of section]
Appendix III: Donor Governments' Contribution Agreements with the
Chernobyl Shelter Project, as of September 2006;
Donor governments: European Commission;
Percentage of total contributions: 26.30.
Donor governments: United States;
Percentage of total contributions: 19.16.
Donor governments: Other G-7 countries;
Percentage of total contributions: 35.97.
Donor governments: Other G-7 countries: Germany;
Percentage of total contributions: 8.35.
Donor governments: Other G-7 countries: United Kingdom;
Percentage of total contributions: 6.57.
Donor governments: Other G-7 countries: Japan;
Percentage of total contributions: 5.91.
Donor governments: Other G-7 countries: France;
Percentage of total contributions: 5.77.
Donor governments: Other G-7 countries: Canada;
Percentage of total contributions: 4.82.
Donor governments: Other G-7 countries: Italy;
Percentage of total contributions: 4.55.
Donor governments: Ukraine;
Percentage of total contributions: 6.22.
Total European Commission, United States, other G-7 countries, and
Ukraine;
Percentage of total contributions: 87.65.
Other countries;
Percentage of total contributions: 12.35.
Other countries: Switzerland;
Percentage of total contributions: 1.29.
Other countries: Russian Federation;
Percentage of total contributions: 1.24.
Other countries: Ireland;
Percentage of total contributions: 1.11.
Other countries: Austria;
Percentage of total contributions: 1.04.
Other countries: Norway;
Percentage of total contributions: 0.96.
Other countries: Sweden;
Percentage of total contributions: 0.92.
Other countries: Netherlands;
Percentage of total contributions: 0.79.
Other countries: Kuwait;
Percentage of total contributions: 0.75.
Other countries: Spain;
Percentage of total contributions: 0.70.
Other countries: Greece;
Percentage of total contributions: 0.69.
Other countries: Denmark;
Percentage of total contributions: 0.69.
Other countries: Finland;
Percentage of total contributions: 0.62.
Other countries: Belgium;
Percentage of total contributions: 0.43.
Other countries: Luxembourg;
Percentage of total contributions: 0.35.
Other countries: Poland;
Percentage of total contributions: 0.35.
Other countries: Slovak Republic;
Percentage of total contributions: 0.28.
Other countries: Korea;
Percentage of total contributions: 0.05.
Other countries: Slovenia;
Percentage of total contributions: 0.04.
Other countries: Israel;
Percentage of total contributions: 0.04.
Other countries: Portugal;
Percentage of total contributions: 0.02.
Other countries: Iceland;
Percentage of total contributions: 0.00[A].
Donor governments: Total, European Commission, United States, other G-7
countries, Ukraine and other countries;
Percentage of total contributions: 100.00.
Source: EBRD.
Note: The percentages exclude pledges that are not officially
confirmed. The shares are also impacted by the CSF rules to account for
pledges in non-euro currencies using set historic exchange rates.
˛Less than .005 percent.
[End of table]
[End of section]
Appendix IV: Comments from the Department of State:
United States Department of State:
Assistant Secretary for Resource Management
and Chief Financial Officer:
Washington, D.C. 20520
Ms. Jacquelyn Williams-Bridgers:
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548-0001:
Jun 25, 2007
Dear Ms. Williams-Bridgers:
We appreciate the opportunity to review your draft report,
"Nuclear Safety: Construction of the Protective Shelter for the
Chernobyl Nuclear Reactor Faces Schedule Delays, Potential Cost
Increases, and Technical Uncertainties," GAO Job Code 360693.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact
Andrew Sowder, Physical Scientist, Bureau of International Security and
Nonproliferation, at (202) 736-4431.
Sincerely,
Signed by:
Bradford R. Higgins:
cc: GAO ” Terry Hanford
ISN ” John C. Rood
State/OIG ” Mark Duda
Department of State Comments on GAO Draft Report
Nuclear Safety: Construction of the Protective Shelter for
the Chernobyl Nuclear Reactor Faces Schedule Delays, Potential Cost
Increases, and Technical Uncertainties
(GAO-07-923, GAO Code 360693)
The Department of State appreciates the opportunity to review and
comment on the Government Accountability Office draft report entitled,
"Nuclear Safety: Construction of the Protective Shelter for the
Chernobyl Nuclear Reactor Faces Schedule Delays, Potential Cost
Increases, and Technical Uncertainties." The report is generally
accurate and informative and provides useful insights into the complex
history and management of the Chernobyl Shelter project.
The Department agrees for the most part with the recommendations made
in the GAO draft report, which include five actions. However, as the
report itself recognizes, Department consideration of the recommended
actions must take into account the special role of the European Bank
for Reconstruction and Development (EBRD) as the Chernobyl Shelter Fund
(CSF) administrator and the Rules of the CSF, which govern the
administration of the Fund by the EBRD and the participation of the
United States and other donors represented on the CSF Assembly.
Department Response to Draft Report Recommendations
Recommendation 1: Establish specific performance benchmarks for the
project that need to be met before additional funds are made available;
Recommendation 2: Periodically review and revise the benchmarks to
ensure they are relevant and applicable to the project's performance
goals and timeframes;
State Response: Partially concur. While benchmarks and the associated
reviews could provide useful management tools, the incorporation of
these additional requirements into the existing cumbersome Chernobyl
Shelter Fund structure could have negative impacts on the EBRD, Project
Management Unit (PMU), and contractor performance. Also, unilateral
application of conditions or constraints on additional pledges could be
negatively received by the other contributors to the CSF. Other major
donor governments would have to concur and cooperate with such an
approach for it to be successful. The implementation of these steps
could require third-party consultant resources that would incur costs
and could result in delays to the project. The U.S. and other donors
would need to evaluate whether the benefits of these control steps
offset the potential negative impacts. It should also be noted that
upon completion of the final design of the new Shelter, the contractor
will have identified all major project construction milestones and
critical path items, and accordingly, the PMU would be expected to
impose appropriate project controls for performance-based payments.
Recommendation 3: Obtain an independent validation of major revisions
to cost estimates;
State Response: Partially concur. As with Recommendations 1 and 2, the
Department agrees in principle with the GAO recommendation for
independent validation of major revisions to cost estimates. However,
as with Recommendations 1 and 2, the Department cautions that the
insertion of another review step could introduce substantial delays to
an already burdensome project management process, especially if
concurrence from the CSF Assembly would be required. A credible
independent validation will require experts with multidiscipline
experience in areas such as cost estimation, project controls,
engineering, risk analysis, etc., and would incur costs associated with
the requisite third-party consultant resources. Such an approach to
this multinational project would require the approval of the CSF
Assembly and would also need to be consistent with EBRD and CSF rules.
Also, it is not clear that independent validation would improve the
cost estimates, as validation alone will not change the uncertainties
or address the difficulties in quantifying those uncertainties. As the
GAO draft report states:
"In general, project costs estimates become more precise as
project designs that define contracted activities are finalized,
bids from firms competing for the contracts are received, and
then a contract is awarded. As work under the contract
progresses, the adequacy of reserve funds becomes known,
which increases the level of certainty in project cost estimates
until the work and contract are completed and final costs are
known."
The U.S. and other donors would need to determine if the benefits of
such a requirement offset the potential delays and increased costs of
the project that would likely result.
Recommendation 4: Develop a contingency strategy for obtaining the
additional funding that may be needed to complete the project. The
strategy should include encouraging other major donor countries and the
European Commission to also contribute additional funding;
State Response: Concur. As indicated above, project costs will become
more precise when project designs and contract terms are finalized.
Once contract terms are final and contract costs have been explained to
the CSF Assembly, the Department will consult with key Congressional
Committees and devise a plan to meet what is certain to be a funding
shortfall. That short fall will have to be addressed on a multilateral
basis, and we would insist that other donors pay their share. The
United States has historically played a leadership role in encouraging
broad international support for the CSF at the three pledging events
held in 1997, 2000, and 2005. Given the Department's prominent role as
the U.S. representative to the CSF Assembly and the relevant G-8
working group in which Chernobyl Shelter matters are addressed, the
Department would also seek broad support among the G-8, European
Commission, and other major donor countries should the need for
additional funding for the Shelter arise in the future as the project
nears completion.
Recommendation 5: Furthermore, to increase State's accountability and
transparency for funding the project, the Secretary of State should
provide a detailed annual report to Congress about the status of the
project, including project costs, project milestones, and estimated
completion dates.
State Response: Concur in principle. The Department is willing, as in
the past, to provide Congress the information needed to support ongoing
and potential future funding for the CSF. If requested, the Department
will forward a report to the Congress based on information from the
EBRD and information that the Department gathers through other channels
including Department and Embassy Kyiv meetings with officials from the
EBRD, the PMU, and the Government of Ukraine, as well as visits to the
Chernobyl Nuclear Power Plant. A biennial (two-year) reporting
frequency may be more appropriate for such a report.
Additional Substantive Comments:
Expansion of Shelter Implementation Plan (SIP) Scope: In several
places, the GAO draft report observes that PMU officials and
representatives from donor governments indicated that "...the
international commitment to Chernobyl may not end with the completion
of the new shelter, and expansions of the project's scope could be
costly."
State Response: The Department has consistently advanced the U.S.
position that the Shelter Implementation Plan (SIP) scope should remain
limited in order to limit cost increases and to ensure the maximum
likelihood of project completion. Any scope expansion for the SIP would
require the non-objection of the CSF Assembly, and the U.S. would not
agree to such an expansion.
Characterization of the Chernobyl Heat Plant Project: The GAO draft
report notes that, "DOE's costs to finish the partially constructed
Chernobyl heat plant, which was needed to supply space heat to
facilities to support the decommissioning of the Chernobyl reactors
rose significantly."
State Response: The United States Government costs for this project,
met through funds authorized under the FREEDOM Support Act, did not
increase significantly. Based on an earlier European Commission's cost
estimate, DOE only conditionally committed to provide $10.5 million for
the facility provided the design was adequate and the facility could be
commissioned. Immediately following the agreement with Chernobyl
Nuclear Power Plant, DOE developed detailed cost and schedule
baselines, which were very closely adhered to for the facility
commissioning. While there were challenges in completing the heat
plant, the first donor-funded construction project at the Chernobyl
industrial site, the facility was completed with minimum impact on cost
and schedule. The heat plant is the only donor funded project that has
been completed at the Chernobyl industrial site and has successfully
operated for the past six years. This project represents a tangible
success achieved through the U.S. ” Ukraine
bilateral cooperation. The Chernobyl Plant management and Government of
Ukraine officials highlight this facility as an example of a "success"
and of how the projects should be managed and executed at the Chernobyl
site.
[End of section]
Appendix V: Comments from the U.S. Agency for International Development
USAID:
From The American People:
JUN 26 2007:
Mr. Gene Aloise:
Director:
Natural Resources and Environment:
U.S. Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548:
Dear Mr. Aloise:
I am pleased to provide the U.S. Agency for International Development's
(USAID) formal response on the draft GAO report entitled Nuclear
Safety: Construction of the Protective Shelter for the Chernobyl
Nuclear Reactor Faces Schedule Delays, Potential Cost Increases, and
Technical Uncertainties (July 2007) (07-923).
USAID concurs with the report's analysis that the Chernobyl Shelter
project has experienced significant delays and may face potential cost
increases. USAID, therefore, believes it is critical for the United
States and other contributors to the Chernobyl Shelter Fund (CSF) at
the European Bank for Reconstruction and Development (EBRD) to monitor
closely the construction progress of the New Safe Containment (NSC)
against clear milestones and to be prepared to consider, in
consultation with other contributors and the EBRD, appropriate actions
if project milestones are not being met.
Your report recommends benchmarks for conditioning the release of
funds. However, we are concerned that imposing new decision-making
processes on the Assembly of Contributors may hinder and further delay
contract implementation. Since we expect that the large $500 million
contract for the construction of the NSC will have performance
benchmarks and legal processes for resolving disputes between the
Chernobyl Power Plant and the contractor, our opinion is that the issue
of additional benchmarks would require careful consideration. GAO's
recommendation regarding benchmarks is not clear as to which funds
releases they would apply to, when they would be reviewed, and what
would be their relationship with the contractual performance benchmarks
and the formal Assembly disbursement procedures.
In addition to ensuring that project milestones are clearly defined and
transparent, USAID views improved reporting by the EBRD to the Assembly
on contract implementation and other project issues to be a high
priority for effective project oversight and monitoring. GAO's report
could be strengthened and clearer on the issue of the adequacy of
reporting to the Assembly by the EBRD. Based on USAID's experience in
attending Assembly meetings and reviewing progress reports to date,
USAID is of the opinion that the EBRD-issued reports are not sufficient
to closely monitor progress during this key construction phase. More
comprehensive reports should be provided to the Assembly to enhance
accountability and transparency and to minimize the need for external
review and audit processes. As GAO confirmed during its investigation,
detailed information is available from the Project Management Unit in
the field that could be incorporated into these more extensive reports.
On the issue of potential cost increases, it is clear that large
international infrastructure projects are experiencing increased costs,
due to higher material, labor, and energy costs. Yet it may be
worthwhile to note that selected on-going and completed CSP projects
have been carried out within budget. With respect to the issue of
potential additional funding requirements, we believe that the
significant improvements in the economic conditions in Ukraine and
Russia since the CSF agreement was signed suggest that these countries
should be in a position to contribute a larger share of any new funding
commitments.
Thank you for the opportunity to respond to the GAO draft report and
for the courtesies extended by your staff in the conduct of this review.
Sincerely,
Signed by:
Mosina H. Jordan:
Counselor to the Agency:
[End of section]
Appendix VI: GAO Contact and Staff Acknowledgments:
GAO Contact:
Gene Aloise, (202) 512-3841 or aloisee@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, Glen Levis (Assistant
Director), John Delicath, Terry Hanford, Keith Rhodes (GAO's Chief
Technologist), Mary Welch, and Jennifer Young made key contributions to
this report. Others who made important contributions included Michael
Armes, Doreen Eng, and Tim Guinane.
FOOTNOTES
[1] The Chernobyl Nuclear Power Plant had four operating reactors,
designated as units one through four. Each reactor has a core designed
to contain uranium fuel and control elements that are held within a
sealed metal container. Additional information on the root causes and
impact of the Chernobyl accident can be found in appendix I.
[2] The European Commission is the European Union's executive body. The
union's member countries are Austria, Belgium, Bulgaria, Cyprus, Czech
Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary,
Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands,
Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and the
United Kingdom. Some of these countries also donate independently to
the Chernobyl Shelter Fund.
[3] The total does not include pledges that have not been paid into the
fund. The European Bank for Reconstruction and Development (EBRD),
which administers the fund, reports the total payments into CSF,
expenditures, and other amounts in euros. The amounts reported here are
derived from its most recent Project Progress Report of October 10,
2006, which reported these amounts as of September 30, 2006. We used
the third-quarter 2006 exchange rate to convert the fund total and
expenditures to U.S. dollars from euros.
[4] We adjusted the U.S. contributions for inflation using a gross
domestic product price index. The proportions of U.S. and European
Commission contributions are based on the contributions agreements from
each country in euros, as reported by EBRD in its October 10, 2006,
Project Progress Report.
[5] The act is more specifically named the Freedom for Russia and
Emerging Eurasian Democracies and Open Markets (FREEDOM) Support Act of
1992, Pub. L. No. 102-511, 106 Stat. 3320.
[6] In addition to the Chernobyl Shelter Fund, EBRD administers the
Nuclear Safety Account, a multilateral fund designed to address safety
improvements in Soviet-designed nuclear power reactors. This account
also supports other projects such as the construction of two facilities
at Chernobyl that are needed to decommission the three other reactors
at the site.
[7] Organizations and other entities include the Assembly of
Contributors (or donor governments, including the European Commission);
the Project Management Unit, including the western consultant
consortium; the Chernobyl Nuclear Power Plant; EBRD's International
Advisory Group; Ukraine's State Nuclear Regulatory Committee; the
Licensing Consultant that assists the Nuclear Regulatory Committee;
Ukraine's Ministry of Emergency Situations that has responsibility for
Chernobyl issues; and the Ukraine-EBRD Joint Committee.
[8] The following countries and organizations have formally pledged at
least the minimum amount of funding to become members of the assembly
of contributors: Austria, Belgium, Canada, Denmark, the European
Commission, Finland, France, Germany, Greece, Ireland, Italy, Japan,
Kuwait, Luxembourg, the Netherlands, Norway, Poland, the Russian
Federation, Spain, Sweden, Switzerland, Ukraine, the United Kingdom,
and the United States. Additional donors to the shelter fund include
Iceland, Israel, Korea, Portugal, the Slovak Republic, and Slovenia.
[9] Electricité de France has nuclear expertise from operating 58
nuclear power plants.
[10] For more information about this assistance, see GAO, Nuclear
Safety: Concerns with the Continuing Operation of Soviet-Designed
Nuclear Power Reactors, GAO/RCED-00-97 (Washington, D.C.: Apr. 25,
2000).
[11] The G-7 consists of the governments of Canada, France, Germany,
Italy, Japan, the United Kingdom, and the United States.
[12] According to the 1997 plan, the total project was scheduled to be
completed after the deconstruction of the roof and unstable parts of
the existing shelter, which was expect to be finished about a year and
a half after completion of the new shelter.
[13] In Ukraine, various government agencies generally use decrees to
establish and promulgate orders and regulations.
[14] In April 2007, a PMU official informed us that CH2M Hill was no
longer participating in the competition for the shelter contract.
[15] We were unable to examine the specifics of the Ukrainian
complaint, the bid protest, or the contract proposals because the
contracting process is confidential under EBRD rules until the contract
is awarded.
[16] EBRD describes an affirmative outcome of a bank review of a
project document as providing a "nonobjection," which it distinguishes
from an approval of the document. For example, EBRD said that its
nonobjection to a contract certifies that the procurement processes and
proposals are in accordance with governing policies and rules but is
not an approval of the contract. According to an EBRD official,
approval of a contract is the responsibility of the recipient of the
CSF grant, such as ChNPP.
[17] We have reported on other international construction projects with
complex management structures. Specifically, a DOE-funded construction
project to build fossil fuel plants to replace plutonium production
reactors in Russia had 17 U.S. and Russian organizations participating
in the project. DOE officials told us that the numerous organizations
involved in managing the complex program made coordination difficult,
which has led to delays. For more information, see GAO, Nuclear
Nonproliferation: DOE's Efforts to Close Russia's Plutonium Production
Reactors Faces Challenges, and Final Shutdown Is Uncertain, GAO-04-662
(Washington, D.C: June 4, 2004).
[18] The 1997 estimate did include an amount to partially account for
project uncertainties. However, it did not identify an amount for cost
contingencies specifically related to the construction of the new
shelter.
[19] The calculated proportion of cost estimates for completed and
ongoing contracts is based on total direct project costs (that is,
estimated project costs minus reserve funds of $161 million). The
calculation also excludes $73 million of contributions that are outside
of the Chernobyl Shelter Fund but are included in the overall project
estimate of $1.2 billion. Specifically, these excluded amounts are
Ukrainian in-kind contributions valued at about $61 million and about
$12 million for U.S. and Canadian funded projects in the late 1990s.
[20] According to PMU officials, under the fixed-price portion of the
new shelter contract, the contractor can claim reimbursements for
additional costs beyond its bid under certain conditions, such as for
delays or increased work scope that result from the other party's
actions. Such claims would be accepted, denied, or negotiated down.
[21] GAO, Nuclear Nonproliferation: DOE's Effort to Close Russia's
Plutonium Production Reactors Faces Challenges, and Final Shutdown Is
Uncertain, GAO-04-662 (Washington, D.C.: June 4, 2004); Weapons of Mass
Destruction: Effort to Reduce Russian Arsenals May Cost More, Achieve
Less Than Planned, GAO/NSIAD-99-76 (Washington, D.C.: Apr. 13, 1999);
and Nuclear Safety: Concerns with the Continuing Operation of Soviet-
Designed Nuclear Power Reactors, GAO/RCED-00-97 (Washington, D.C.: Apr.
25, 2000).
[22] GAO has noted that this can be a risky strategy. We have reported
on the construction of a nuclear waste treatment plant in the United
States that similarly experienced high cost overruns because, among
other things, construction was started before design and technology
development was completed. The U.S. Department of Energy's project
management guidance cautions that concurrent design and construction
should only be used in limited situations, such as when work scope
requirements are well defined, projects are not complex, and technical
risks are limited. GAO, Hanford Waste Treatment Plant: Contractor and
DOE Management Problems Have Led to Higher Costs, Construction Delays,
and Safety Concerns, GAO-06-602T (Washington, D.C.: Apr. 6, 2006).
[23] Within State, the Office for U.S. Assistance for Europe and
Eurasia has responsibility for determining the level of FREEDOM Support
Act funding to CSF. To make funding decisions, that office coordinates
with State's Office of Nuclear Energy, Safety and Security, which has
responsibility for the policy and subject matter related to nuclear
safety for the project and CSF and has the lead for U.S. representation
in the assembly of contributors.
[24] This funding shortfall is the most current official estimate
provided to us by PMU officials. However, PMU officials indicated that
the estimated funding gap will fluctuate up and down with changes in
such factors as exchange rates, interest earned on the CSF, and revised
project cost estimates.
[25] This contribution amount includes installment payments totaling
about $142 million into the CSF and credit for an in-kind contribution
of about $12 million, which DOE spent to improve the safety of the
Chernobyl shelter.
[26] Fission is a nuclear reaction in which a nucleus is split into
fragments, usually two pieces of comparable mass, accompanied by a
release of energy.
[27]Uranium is a heavy metallic element that is naturally radioactive.
It can be processed for use in research, nuclear fuels, and nuclear
weapons. Its atomic number is 92, and it has 92 protons and 92
electrons. Uranium has several isotopes, the most abundant being U-238.
However, U-235, as the fissile component of uranium, is the most
important because it is usable as nuclear reactor fuel. U-235 is not
very abundant and must be enriched for use in most nuclear power plants.
[28] The reactor core is the center of a nuclear reactor, and it
contains the fuel that runs the reactor and the control elements.
[29] Fuel is the fissionable material used in a nuclear reactor. It is
contained in sealed fuel rods within the reactor core.
[30] Neutron is a neutral, or uncharged, particle that is stable when
contained in the nucleus. It combines with protons, which are
positively charged subatomic particles, to form the nucleus of nearly
any given atom.
[31] Chain reaction is a nuclear reaction consisting of a self-
sustaining series of fissions, in which the average number of neutrons
produced exceeds the number absorbed or lost.
[32] control element is a device used to control the power level of a
nuclear reactor by absorbing neutrons and thereby controls the chain
reaction taking place inside the reactor.
[33] Pressurized Water Reactor is a type of power producing reactor
that keeps the water surrounding the core under pressure. When the
pressurized water is heated by the reactor, it is sent to a heat
exchanger, which boils water that is kept at a lower pressure. This
steam is then sent to a turbine to generate electricity.
[34] Boiling Water Reactor is a type of power producing reactor that
boils water directly in the core; steam is then sent to a turbine to
generate electricity.
[35] A becquerel (Bq) is the international unit of radioactivity that
equals one nuclear decay per second.
[36] The third western company in the consortium is Electricité de
France, which is headquartered in France.
[37] For example, see Construction Management Association of America
Inc., Construction Management Standards of Practice, (McLean, Va.:
2002).
[38] Outside of the recording procedure for CSF contribution
agreements, payments into CSF are recorded at the exchange rate at the
day of receipt.
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