Ukraine energy minister summoned to address corruption concerns after nuclear project spat

Aura Sabadus

13-Jan-2025

  • MPs renew call for German Galushchenko to address ministry corruption concerns
  • The summon comes after minister and MPs disagree over nuclear capacity relying on Russian technology
  • MPs raise fears over major costs, no transparent project supervision

LONDON (ICIS)– The Ukrainian energy minister German Galushchenko has been summoned to parliament to explain accusations of corruption in the ministry, two members of parliament confirmed to ICIS on 13 January.

Galushchenko was summoned in parliament in September 2024 after a deputy minister was fired for accepting a bribe. The minister refused to attend at the time.

MPs have now renewed the request for Galushchenko to appear in the unicameral parliament of Ukraine this week after a major dispute erupted over a government push to build multi-billion dollar nuclear capacity reliant on Russian technology.

Last year, the government resurrected plans initiated in the 1990s to build two new reactors with an installed capacity of 2GW, whose costs at current levels could reach $4 billion.

The project, which benefits from the support of German Galushchenko and the nuclear producer Energoatom, involves buying two old reactors purchased by Bulgaria from Rosatom some 15 years ago.

The reactors were secured for the construction of the Belene nuclear power plant in northern Bulgaria but had not been used amid an arbitral dispute with Rosatom which eventually forced the southeast European country to pay $620 million to the company for them.

The Ukrainian government now wants to buy these reactors and use them at the Khmelnitsky nuclear power plant in southwestern Ukraine.

PROJECT DETAILS

MPs including some members of the majority Servant of the People party oppose the deal, claiming Galushchenko had not been providing updated technical details and financial estimates for the project.

They also raised concerns about the minister’s reference to some members of the EU delegation in Kyiv, whom he described as ‘mid-level diplomats,’ not authorized to express an official position.

The government wants the project to be discussed and approved in the full chamber but no official date has been set yet.

Speaking to ICIS, Inna Sovsun, a MP from the opposition Holos party and member of the parliament’s energy committee, said Galushchenko appeared in parliament last week and submitted documents dating back to 2018, which are no longer valid.

“He provided an estimate of Ukraine Hryvnia (UAH) 77 billion (€1.8 billion) but, considering Ukraine’s high inflation rate since the start of the war, this cost is at least double that between UAH150-UAH200 billion,” she said.

Sovsun said Galushchenko himself accepted the cost may be higher and added that he submitted technical specifications for a project that was slightly different to the one that is supported by the government.

The government insists Ukraine needs secure electricity capacity to replace the thermal power plants which had been destroyed by Russian missiles.

However, Sovsun said it would take years to build the nuclear capacity, offering cold comfort to millions of Ukrainians who had endured power cuts since the start of Russia’s full-scale war.

“Is this [the nuclear capacity] the best option now? We need things done quickly and as cheaply as possible,” she said.

FINANCING

Sovsun also raised questions about the financing of the project, noting that it may be difficult for Energoatom to secure funds from international financial institutions.

This is because the company still has no functional supervisory board to oversee its operations.

If Ukraine fails to secure funding from IFIs it may need to increase end consumer electricity tariffs to fund the project.

Sovsun noted that considering the sensitivity of the project it may be subject to no public scrutiny, which could open up opportunities for corrupt practices.

A supervisory board was appointed at Energoatom in June 2024 but has not been meeting or publishing activity reports since then, according to Oleksandr Lysenko, a Ukraine-based corporate governance specialist who confirmed this to ICIS.

Speaking to ICIS Andrii Zhupanyn, an MP and deputy head of the energy and utility committee said minister Galushchenko’s reference to members of the EU’s delegation to Kyiv as mid-level diplomats not authorized to make an official statement on the matter was being ‘carefully read’ in western embassies.

He said the minister had referred to private correspondence between Sovsun and some members of the EU delegation.

Sovsun conceded neither US nor EU partners had not expressed an official view on Ukraine’s nuclear power plans.

The ministry of energy did not reply to questions from ICIS but said in a statement posted on its website: “Within the framework of the relevant public discussions, private correspondence of mid-level diplomats, not authorized to express the official position of the EU or its member states, was used.”

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