Bulgarian Officials Baffled by Rosatom Comment on Belene NPP Price

Rosatom official Kiril Komarov /R/ and company spokesman Sergey Novikov /L/ during a press conference in Sofia, Bulgaria March 16 2011. Photo by BGNES

Bulgarian government officials and MPs were thrown in an awkward confusion over the mention of a new, higher price for the construction of the Belene nuclear power plant by a senior official of Russian state corporation Rosatom.

Speaking at a meeting in the Russian State Duma of its committee for cooperation with the Bulgarian Parliamen on Thursday, Kiril Komarov, CEO of the nuclear energy complex of Rosatom and director of Atomenergoproekt, declared that the overall cost of the project for the construction of Bulgaria's second nuclear power plant "Belene" will be EUR 8 B.

It was unclear how Komarov arrived at the EUR 8 B figure as the final price of the Belene NPP under the current non-binding deal between Bulgaria and Russia is for EUR 6.3 B – the sum that Komarov and Novikov mentioned last week in Sofia; Bulgaria is said to demand a price of as little as EUR 5 B.

Komarov's unclear statement led to disconcerting comments in Bulgaria on Friday.

"I suppose this is part of the manipulations that are carried out as part of the pressure exerted on Bulgaria in the price talks. But the memorandum that signed with Rosatom states a price of a bit over EUR 6.2 B, i.e. this is the sum that the cost of the Belene NPP cannot exceed, plus the Bulgarian National Electric Company NEK has envisaged EUR 800 M to complete the adjacent infrastructure. This makes EUR 7.1 B as a total sum, the inflation included. Perhaps it will cost them EUR 8 B but it will certain won't cost us that much," declared MP Valentin Nikolov from the ruling party GERB, who is the head of the Parliamentary Economy Committee.

Martin Dimitrov, Co-Chair of the rightist Blue Coalition, declared that the Russians appear to have a more precise knowledge of the Belene project, and that, unlike the Bulgarian government, they apparently presented correct data before the Russian Parliament. On Friday, the Blue Coalition demanded the holding of a referendum on the construction of the Belene plant. Dimitrov said that the installation of the Belene NPP in the energy system of Bulgaria will cost another EUR 3 B, referring to the estimate of the Sofia-based Institute for Market Economy that the overall cost of the Belene project will be EUR 11 B.

In a statement to the Bulgarian media late Friday afternoon, Russian state nuclear corporation Rosatom sought to clear the confusion over Komarov's Thursday's comment by explaining that when mentioning EUR 8 B the Rosatom executive meant the entire volume of investments into Belene.

This is said to include the money already invested in it to date, the spending on consultants, plus the EUR 6.298 B set in the memorandum between NEK and Rosatom for the actual construction of the two 1000-MW reactors.

In November 2010, 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 was expected to emerge in 4-5 months, according to Rosatom head Sergey Kirienko, who was in Sofia to sign the document.

In early March 2011, as the negotiations continued to drag on, Rosatom's Komarev and spokesperson Sergey Novikov warned that the talks must be completed by March 31, 2011.

The other non-binding documents on Belene signed 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 has expressed interest in acquiring a share of 5%-10% but the talks for that have not been finalized yet. It is unclear what share Areva might go for if it ultimately decides to seek participation in Belene.

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.

In February 2011, Bulgarian PM Borisov held talks with the French holding Areva over Belene.

The Areva Holding together with Siemens is actually already involved in the construction of Belene as a subcontractor to Russian state company Atomstroyexport.

In mid-March 2011, apparently acting on concerns caused by the situation in Japan's Fukushima NPP after the recent devastating earthquake there, the European Commission confirmed that it wants to reexamine the Belene NPP project - once Bulgaria finds an investor for it - even though it already approved it back in 2007

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