March 5th, 2002

The Right Honourable Jean Chrétien
Prime Minister
Government of Canada
Office of the Prime Minister
80 Wellington Street
Ottawa, Ontario
Canada       K1A 0A2
(613) 941-6900

Subject: Cernavoda 2 Nuclear Power Plant project in Romania, EDC export credit approval

Dear Prime Minister Chrétien,

We are writing you to express our deep concern about the possibility that Export Development Canada (EDC) will approve $390 million ($250 million US) in financing for the completion of the second CANDU reactor of the Cernavoda Nuclear Power Plant (C2) in Romania.

Being a Canada Account Loan, this $390 million would come from the government’s main operating account, the Consolidated Revenue Fund, and would directly implicate Canadian taxpayers.  It is therefore imperative the Government of Canada carefully consider the social and environmental impacts of this project before proceeding with the approval process.

On December 1st, 2001, EDC posted an Environmental Assessment Summary (EAS) produced by AECL on Nuclearelectrica SNN’s and AECL’s web site and requested comments for a 45-day-long period. Several international NGOs, including Halifax Initiative, Campagna per la riforma della Banca mondiale and CEE Bankwatch, endorsed an independent review of the environmental study produced by the Sierra Club of Canada. International NGOs find unacceptable that only a summary of the project’s Environmental Impact Assessment (EIA) study has been disclosed. Furthermore, the summary itself is totally inadequate.

Campagna per la riforma della Banca mondiale from Italy and CEE Bankwatch from Eastern Europe recently visited Romania in order to better understand the economic, environmental, safety and social implications of the controversial C2 project. Please find enclosed a copy of the Fact-Finding Mission Report, including specific recommendations for EDC and other project financiers.

The Fact Finding Mission is informed by officials from the Romanian Environment Ministry that the Romanian government is finalising its own EIA which will be subjected to public consultations with locally-affected communities and Romanian NGOs before the Environment Ministry grants C2 a license.  This process follows the Romanian Law on Environmental Protection[1]. We believe that according to its recently-adopted Environmental Review Directive, EDC should review the EIA study produced by the host country, and not the study carried out by a project sponsor without any independence in its evaluation. In this regard, the World Bank operational policy 4.01 should be noted:

“4. The borrower is responsible for carrying out the EA. For Category A projects, the borrower retains independent EA experts not affiliated with the project to carry out the EA. For Category A projects that are highly risky or contentious or that involve serious and multidimensional environmental concerns, the borrower should normally also engage an advisory panel of independent, internationally recognized environmental specialists to advise on all aspects of the project relevant to the EA. The role of the advisory panel depends on the degree to which project preparation has progressed, and on the extent and quality of any EA work completed, at the time the Bank begins to consider the project.”

During its stay in Romania, the Fact-Finding Mission had a chance to visit the EU delegation office in Bucharest. EU energy experts confirmed that the increase of power generation in Romania is not needed and is an improper priority set by the Romanian government which has disregarded the EU’s recommendations of pre-accession conditions for the energy sector.[2] Confirming this ill-conceived approach, several Romanian energy officials told the Fact-Finding Mission that the Romanian government will attempt to export electricity, even though it is likely that none of the neighbouring countries would be interested in importing it.

Therefore, the rationale for the completion of C2 still remains unclear to us. By contrast, foreign public loans, export credits and credit guarantees for about $700 million (US) in favour of non-nuclear projects in the Romanian energy sector could help implement a more coherent long-term energy strategy with much lower environmental, safety and economic risks. Urgent interventions are needed in the Romanian energy sector to reduce the huge energy losses in the transmission network, promote demand side management and rehabilitate some thermal and hydro power plants. It should be noted that none of the Romanian energy officials, with whom the Fact-Finding Mission met, were able to provide detailed figures for cost of the electricity produced at Cernavoda Unit 1. A proper cost-benefit analysis of all non-nuclear alternatives has never been carried out, so that it is impossible to prove that the C2 project is actually the least-cost option to increase power generation in Romania, in the unlikely event that this increase is really needed.

Concerning safety, health and environmental risks associated with the Cernavoda NPP, we would like to note that nuclear projects present significant transboundary risks associated with their operations. Apparently the Romanian government has not fulfilled its obligations under the Espoo UN/ECE Convention on the Environmental Impact Assessment in a Transboundary Context, which entered into force in 1997 and was ratified by Romania and nearly all its neighbouring countries, including Bulgaria where there is a strong opposition to this project. The approval of the EDC export credit for C2 under these conditions would make the Canadian government an accomplice in the violation of international environmental law by the Romanian government.

During the visit to the Cernavoda NPP on February 1st, 2002 the Fact-Finding Mission was deeply dismayed that no specific security measures had been put in place by the Romanian government in the wake of the tragic September 11th terrorist attacks in the United States. Recent concerns about the possibility of terrorist attacks against nuclear power plants are a further warning about new and higher risks associated with the operations of these plants.

Furthermore, informal public consultations promoted by project sponsors about the C2 project last year were held only in the Constantza region and reportedly were attended only by “pro-nuclear” NGOs, many of which have been created by officials currently working for state nuclear agencies. The Fact-Finding Mission met several NGOs who oppose the nuclear policies of the Romanian government and its overall energy policy. They could not attend the meetings because of the lack of funding to cover their travel expenses to the Constantza region.

On the basis of the evidence gathered by the Fact-Finding Mission during its visit to Romania, we urge you:

   1. To make public for comment the full version of the Environmental Impact Assessment study, including the 1998 Alternatives Study and the economic study “Modernisation Project for Cernavoda NNP 2 – Assessment of the Economic Justification” to which the AECL Environmental Assessment Summary refers;
       
   2. To make public for comment the full EIA document commissioned by the Romanian government, after this has been approved by the Romanian Environmental Ministry, 60 days in advance of the final approval of the export credit; furthermore, an independent review of the EIA document should be conducted by an impartial Panel with a mandate and sufficient resources to undertake independent expert review and public consultations with NGOs in Canada;
       
   3. To commission a new independent and updated Alternatives Study in order to carry out a reliable and detailed cost-benefit analyses of all non-nuclear alternatives to the C2 project; such study should include a specific analyses of additional security measures needed at the Cernavoda NPP in order to prevent terrorist attacks in the future and a detailed analysis of additional costs related to the implementation of these measures;
       
   4. To make the EDC export credit approval for C2 conditional on the outcome of the consultation meetings with the project-affected population and Romanian NGOs, which should take place next March according to the Romanian Environment Ministry; the EDC and the Canadian government should urge the Romanian government to make sure that even those groups in opposition to the project be allowed to attend next official public consultations and to comment during the same meetings on the national long-term energy strategy, which is going to be finalized by the Romanian government in the next weeks;
      
   5. To make the EDC export credit approval conditional on the outcome of an adequate official consultation between Romania and its neighboring countries, in particular Bulgaria, on the transboundary impacts of the C2 nuclear project according to the procedures under the Espoo UN/ECE Convention on Environmental Impact Assessment in a Transboundary Context.

The failure of the Canadian government to address our recommendations will make an appropriate energy policy for Romania impossible, and result in the needless construction of a second nuclear plant.  Furthermore it will destroy the credibility of the environmental guidelines recently adopted by the EDC.

While we recognize that this letter is being submitted past the 45-day comment period, we would respectfully request that it be formally considered by cabinet and the EDC.  We thank you in advance for your kind attention to our concerns and look forward to your prompt reply.

Sincerely yours,
 
Melanie Quevillon                                                       
NGO Working Group on the EDC
Halifax Initiative, Canada                                   
153 Chapel Street, Suite 104                             
Ottawa, Ontario   K1N 1H5    
Canada

On behalf of:

Antonio Tricarico        
Campagna per la riforma della Banca mondiale
Via Tommaso da Celano, 15
Scala A, Interno 5                                                                     
00179 Rome                                                                           
Italy

David H. Martin
Sierra Club of Canada, Canada
Box 104
Uxbridge, Ontario  L9P 1M6
Canada

Cc: The Honourable Pierre Pettigrew, Minister of International Trade
       The Honourable Paul Martin, Minister of Finance
       The Honourable Gar Knutson, Secretary of State (Central and Eastern Europe and Middle East)
       The Honourable Herb Dhaliwal, Minister of Natural Resources
       Mr. Ian Gillespie, President and CEO, Export Development Canada

Encl: “Exporting Nuclear Risks:  Canada, Italy and EU’s responsibilities in subsidizing nuclear export to Romania”