As the 2019 presidential election continues to dominate Ukraine’s news cycle, incumbent head of state Petro Poroshenko has quietly issued a decree ordering his ministers to urgently act on nuclear energy.
The April 4 decree instructs the Cabinet of Ministers to “immediately” submit a bill to parliament on the placement, design and construction of two new reactors at the Khmelnytskyi nuclear power plant, located some 300 kilometers west of Kyiv.
Poroshenko appears committed to having the new reactors approved and built as soon as possible. The decree highlights Poroshenko’s resolve to ease financial burdens on both the nuclear energy sector and the energy consumers who rely on it.
According to the document, other laws must also be amended within two months in order to support the development of nuclear energy and improve the level of security around its usage. The decree also prioritizes security and recognizes “the need to ensure the effective independence of the state body that regulates nuclear and radiation safety and strengthen its institutional and financial capacity.”
However, investigative journalists have linked the two planned reactors to a Russian-owned company, fueling concerns about security and safety.
Official documents show that the company that has reportedly been chosen to upgrade the power plant – a project worth around Hr 70 billion, or at least $2.5 billion – has a track record of potentially dangerous cost-cutting. The chosen company also appears to be ultimately owned by Russia’s state-owned Gazprombank, fueling security fears.
On Jan. 25, the Kyiv Post reported that journalists were raising questions and concerns over the legality and safety of the proposed reactor project.
Radio Free Europe/Radio Liberty’s Schemes investigative program revealed on Jan. 24 that Škoda JS – a company registered in the Czech Republic – had already been chosen for the project “without an open tender.”
Documents and registries show that Škoda JS is a subsidiary of Netherlands-registered OMZ BV, which appears to be a front for the Russian company United Machine Building Plant. It is owned by Russia’s state-owned Gazprombank.
Russian energy giant Gazprom and its related company structures hold a majority stake in Gazprombank.
Ukraine has put sanctions on Gazprombank, but not Škoda JS, despite the fact that the Czech-based company is under U.S. and European sanctions.
Schemes reported that bosses at the Khmelnytskyi nuclear power plant had explained that Škoda JS was mainly chosen on the basis of its low cost. The company, they said, was significantly cheaper than other potential suppliers, such as Korean manufacturers or U.S.-based energy company Westinghouse.
Škoda JS also appears to be the focus of an ongoing graft investigation. The National Anti-corruption Bureau of Ukraine, or NABU, is looking into its shady offshore financial arrangements and the possibility that some of its dealings in Ukraine have been illegal.
There are also questions as to whether the deal further undermines national security in the energy sector.
On March 29, the Kyiv Post reported that significant parts of Ukraine’s energy supply market are likely controlled by businessmen with close ties to the Kremlin. State registries show that one allegedly Russian-owned company owns sizable stakes in eleven regional electricity supply networks.
More broadly, most electricity supply companies in Ukraine, despite the ongoing war, still appear to be owned by Russian oligarchs — 21 out of 27, according to Ukrainian media reports and data in official registries.
Khmelnytskyi’s nuclear power plant, operated by Ukraine’s state-owned nuclear agency Energoatom, currently has two 1000 megawatt reactors but was intended to eventually have four. Construction began on two new reactors in the early 1980s but was stopped due to a moratorium on the construction of new nuclear plants following the 1986 Chernobyl disaster.
