The Economist, February 18th 1995

A storm is blowing up at the European Bank for Reconstruction and Development (EBRD). By April, the bank's directors must decide whether to provide cash for a nuclear-power project in Slovakia. Austria, which is home to one of Europe's strongest anti-nuclear lobbies, is threatening to pull out of the development bank if it goes ahead.

Under the proposed deal the EBRD, which was formed in 1991 to make project loans to the formerly-communist economies, is supposed to lend DM 413m ($273m) to help complete two Soviet-designed nuclear reactors in Mochovce, near Slovakia's borders with Austria and Hungary. The remaining DM 900m for the project would come from other sources, the bulk of it from Electricité de France, a French utility, and Bayernwerk, a German one.

Officials at the EBRD claim that their primary goal is to improve safety at Mochovce. Alain Pilloux, the banker in charge, says the loan would ensure that western safety features were added to the plant, and points out that EBRD participation is conditional on Slovakia closing down older, and more dangerous, reactors at Bohunice. He adds that Slovakia intends to complete the nuclear plant (which is already 80% finished) with or without the EBRD-Russia is offering $ 150m of equipment and labour to get the Mochovce plants up and running. And finally, Mr Pilloux argues that this is only a one-off investment.

But European environmental groups are not impressed. They fear that if Mochovce goes ahead, western companies will try to rehabilitate other Soviet-designed reactors in the region. They point out that the World Bank refuses to finance nuclear plants on the grounds that their financial and environmental costs cannot be justified. And they claim that the project has progressed this far only because of pressure from the French and German utilities, who will also carry out much of the work on it. The EBRD denies this.

The environmentalists have also begun attacking the project's economics. They dispute EBRD findings that completing Mochovce is the lowest-cost option for Slovakia. A gas-fired plant would be cheaper, they say. A report commissioned by Greenpeace, and published this week, questions the analysis prepared for the EBRD by Putnam, Hayes & Bartlett (PHB), a British consultancy. The report says, among other things, that PHB overstated Slovakia's energy needs, under-estimated the plant's decommissioning costs and used an average gas price double those estimated by the World Bank and the European Investment Bank when calculating the cost of alternatives.

The Austrian government is already lining up opposition to the project. It is pressing America and Canada - together with traditionnally non-nuclear states such as Denmark, Holland and Norway - to vote with it against the EBRD loan. The Bank is also said to be divided internally over the issue. The outcome of this particular nuclear test is still a long way from certain.