Critics Fear Finnish Company Can Be Russia's 'Trojan Horse' in Bulgarian NPP

Energy | January 21, 2011, Friday // 20:54|  views

The outside view of the Fortum Corporation house in Keilaniem, Finland; Bulgarian rightists, who are traditionally hostile to the Belene NPP, fear the Finnish company could give Russia additional leverage over the project for a second Bulgarian nuclear pl

Finnish company "Fortum" could be the "Trojan horse" of Russian state company Rosatom in the project for the second Bulgarian nuclear power plant Belene, according to the rightist Blue Coalition.

Non-binding documents on Belene signed in Sofia in November 2010 provided for participation in the project of Finnish company Fortum with a share of 1%, and of French company Altran Technologies with a share of 1%-25%. NEK is to keep a majority share of 51%, while Rosatom is also expected to have a share of 25%. Serbia's government might also expected to have a share, mostly likely 5% or 10%.

Fortum has declared it had no intention to acquire more than 1% in Belene. However, according to MP Ivanov, who sees the Finnish company as a protege of Rosatom, however, Fortum can get up to 25%, thus helping Rosatom acquire control over the plant.

Ivanov believes this is a possibility since Fortum and Rosatom manage together a nuclear power plant in Finland, which means that they are "connected entities."

"This changes radically the stakes in the Belene NPP project and the way of decision-making with respect to its construction. PM Borisov has stated many times that we are seeking a strategic European investor, while Fortum meets only the condition of being European. I think this is unacceptable, and my concerns are more than evident. We need an investor that will be truly independent with respect to its decision-making. Fortum's very inclusion in this project proves the impotence of the government to find really big European investors," MP Ivanov declared in Parliament.

Economy and Energy Minister Traikov, however, has responded that Fortum meets all requirements of the Bulgarian government for participation in the project for the construction of the Belene plant.

"The fact that Fortum has a joint project with Rosatom does not make them dependent in their decision-making on Rosatom or Rosneft. The answer depends on how you define "connected entities". This situation is acceptable if the financial terms of the construction are favorable for us," Traikov declared.

Finland's government is the majority owner of energy concern Fortum, which is active in the Scandinavian and Baltic states, Russia, and Poland.

"The Finnish government has a 51% share in Fortum. From what I understand, the company's participation in the Belene project will have to get the approval of the Finnish Parliament. What stronger guarantee do you want?" Traikov asked the Blue Coalition.  

Reports in the Bulgarian media have voiced concerns that the other major foreign investor in Belene, the French company Altran Technologies, might also be connected with Rosatom as the Russian company has announced plans to enter the French market, and might do so with Altran's help as an intermediary.

The rightist Blue Coalition led by former Bulgarian PM in 1997-2001 Ivan Kostov has been demanding the abandoning of the Belene NPP project arguing it would increase Bulgaria's dependence on Russia.

Bulgaria's Borisov Cabinet declared that it would not provide money from the state budget for the construction, it set out in search of potential foreign investors to fuel the construction of the plant. By the end of 2010, it reached a certain level of progress in talks with Russia and Rosatom's subsidiary Atomstroyexport, and with some foreign companies interested in having shares in the project.

In November, shortly after a visit to Sofia by Russian PM Putin, Bulgaria's National Electric Company NEK and Russian state company Rosatom signed a memorandum providing for a final fixed price for the two reactors of EUR 6.298 B.

This sum is still not final since the document is not binding; a final binding agreement for the establishing of a joint company for Belene is expected to emerge in 4-5 months, according to Rosatom head Sergey Kirienko, who was in Sofia to sign the document, at the same time when the non-binding agreements with Fortum and Altran were inked.

After it was first started in the 1980s, the construction of Bulgaria's second nuclear power plant at Belene on the Danube was stopped in the early 1990s over lack of money and environmental protests.

After selecting the Russian company Atomstroyexport, a subsidiary of Rosatom, to build a two 1000-MW reactors at Belene and signing a deal for the construction, allegedly for the price of EUR 3.997 B, with the Russians during Putin's visit to Sofia in January 2008, in September 2008, former Prime Minister Stanishev gave a formal restart of the building of Belene. At the end of 2008, German energy giant RWE was selected as a strategic foreign investor for the plant.

The Belene NPP was de facto frozen in the fall of 2009 when the previously selected strategic investor, the German company RWE, which was supposed to provide EUR 2 B in exchange for a 49% stake, pulled out.

Subsequently, in the last months of the Stanishev government in early 2009, Putin offered Bulgaria a Russian state loan of EUR 4 B, which ex PM Stanishev refused.

In late 2009, after the Borisov government took over, Rosatom offered Bulgaria a loan of EUR 2 B so that the construction can continue, in exchange for a stake in the future plant that the Bulgarian government could then buy out by returning the money. The offer was refused by the Borisov Cabinet which also made it clear it would construct the Belene plant only if an European (apparently meaning EU or Western European) strategic investor can be found.

Under Bulgaria's preliminary contract with Atomstroyexport signed in 2008, the construction of the Belene plant with two 1000-MW VVER nuclear reactors is supposed to cost EUR 3.997 B.

As the contract expired on September 30, 2010, Bulgaria and Russia decided to extend it by 6 months until they reach a final agreement on how much the construction of the Belene NPP will cost.

In mid November, the Bulgarian Energy Holding, NEK's parent company, picked HSBC, one of UK's biggest banks, for a consultant to help it decide how to proceed and attract new investors for the planned Belene nuclear power plant.

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Tags: Traicho Traikov, Economy Minister, Belene NPP, Nuclear Power Plant, Russia, Rosatom, Atomstroyexport, Ivan Ivanov, Blue Coalition, DSB, Finland, Fortum, Altran Technologies, Trojan horse


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