Nuclear power has proved an uncomfortable issue for the European Bank for Reconstruction and Development but one it has found impossible to duck.

Now the bank is at the center of a high-profile nuclear wrangle. What to do about Chernobyl in Ukraine?Ukraine's neighbors want the plant closed, hardly surprising in view of the plant's past. In 1986 one of its reactors blew up, spewing radiation across large swaths of Europe. Ukrainian authorities have said they're prepared to shut down the three remaining reactors, but at a price. They want technical and financial assistance for both plant closure and replacement capacity.

The West has already said it will help. In 1995 the Group of Seven industrialized countries signed up to provide assistance with the costs of both closing Chernobyl and a series of energy-saving and capacity-generating measures. It then promptly gave the job of cutting the deal to the EBRD. In doing so, it handed the bank a can of worms by insisting the EBRD could only back the lowest cost option.

On the face of it, that sounds like an eminently sensible condition. Why spend more money than necessary? The snag is that when it comes to power generation, especially nuclear power generation, defining just what constitutes the lowest cost option is a nightmare.

The EBRD already has two reports on Chernobyl; one saying a nuclear alternative - completing the Khmelnitsky-2 and Rivne 4 plants, the "K2R4" option - is the best financial bet. Another, apparently more detailed, look at the nuclear option reckons it isn't.

One way out would be for the bank to persuade Ukrainian authorities that they don't need to replace Chernobyl's output - which represents just over 5 percent of the country's installed capacity - at all.

That would leave just two issues - building a new sarcophagus for the reactor, which blew up in 1986, and for which $850 million has already been earmarked, and the closure and decommissioning of the other three reactors at an estimated cost of $350 million.

Even that wouldn't be easy, but it would save the EBRD from criticism that it was encouraging the building of new nuclear capacity as well as some hefty financial commitments.

Ukrainian officials, however, show no inclination to let the bank and its Western backers off so lightly. In a letter to the British-based Economist magazine recently, Ukraine's minister for environmental protection and nuclear safety, Yuriy Kostenko, made it clear that Ukraine reckons all concerned should stick to the 1995 deal which aimed at seeing Chernobyl closed by 2000.

He added, rather ominously: "It would be ironic if the G7's refusal to assist Ukraine in developing a peaceful nuclear-energy sector undermined our independence."'

That might ring a little oddly in Western ears. Nuclear power is hardly flavor of the month, the year or even the decade. It plays rather better in Eastern Europe, however. Alternative sources of power generation have to be fueled by imports of oil or gas that dig deep holes in scarce hard currency resources.

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Expensive imports also have a knock-on effect on prices for domestic consumers.

The EBRD, which plans to hold its next annual meeting in Kiev next year, is likely to decide its response to the Chernobyl question before the end of the month. It has a number of options:

- It can accept the K2R4 option. The bank would then have to come up with $330 million as its share of the total financing package. It would also have to be confident that the project could produce an adequate commercial return.

- Or it could offer to upgrade other existing nuclear plants in Ukraine. It might even have another look at earlier, fossil fuel-fired proposals.

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