EDC response re Cernavoda 2 - August 14, 2002

August 14, 2002

Ms. Pamela Foster

Coordinator

Halifax Initiative

153 Chapel Street, Suite 104

Ottawa, Ontario

K1N 1H5

Dear Ms. Foster,

This is in reply to your letter of July 11, 2002, regarding possible Export Development Canada (EDC) support for the Cernovoda Nuclear Power Plant, Unit Two.

Regarding your first question, we are aware of the provisions of the Convention on Environmental Impact Assessment in a Transboundary Context (Espoo, 1991, or the Convention). We have reviewed the above referenced project from the perspective of the provisions of the Convention and have found no evidence that the project is likely to cause a significant adverse transboundary impact, nor any evidence that Romania is in violation of its obligations under the Convention. The environmental assessment documentation indicates that the potential area of likely environmental impacts lies entirely within Romania's territory. Further, the Convention contains mechanisms for neighbouring states to request an exchange of sufficient information for the purposes of holding discussions on whether there is likely to be a significant adverse transboundary impact.  The government of Bulgaria has not, as far as we are aware, registered such a request to date.

In connection with your second question, we understand that host country laws concerning Environmental impact assement have been, and will continue to be, followed in respect of the project. Regarding nuclear safety and radiological effects, the environmental assessment documents indicate that Romanian regulations are closely modeled after relevant International Atomic Energy Agency ("IAEA") and International Commission on Radiological Protection ("ICRP") guidance. Regarding non-nuclear environmental effects, the project's design parameters have been found to be consistent with relevant World Bank guidelines. Public consultations were carried out by the project sponsor, Societatea Nationala Nuclearelectrica S.A. (SNN) during the preparation of the Environmental Impact Assessment (EIA) prepared jointly with Atomic Energy Canada Limited (AECL). On the basis of the above, we expect the project to comply with relevant international standards and guidelines.

SNN has recently completed an environmental impact assessment of this project performed by the Romanian National Environmental Institute (ICIM) for submission to the Romanian authorities. Independent of when EDC may enter into a financing agreement for this project, EDC's obligations under such an agreement would only be effective upon receipt and review to our satisfaction of the ICIM EIA.  We have no reason, currently, to anticipate that the ICIM EIA will contain conclusions that are materially different from the SNN/AECL EIA. Finally, the financing agreement would obligate SNN to comply with host country environmental laws for the duration of the financing.

Thank you for your comments on this transaction. As always, your input helps EDC assess the comprehensivesness of its own analysis.

Yours sincerely,

A. Ian Gillespie

President and CEO

Export Development Canada