Bulgaria, Russia Strike Deal on Belene Nuclear Plant Negotiations

Energy | April 5, 2011, Tuesday // 17:50|  views

The idle construction site of Belene NPP in Bulgaria. Photo by BGNES

Bulgarian National Electric Comany and Russian Atomstroyexport have reached a deal Tuesday to extend their negotiations on the planned Belene NPP.

The National Electric Company (NEK) and Atomstroyexport signed Tuesday a Memorandum of Understanding to extend the analysis on the project by 3 more months - up to June 30, 2011.

The prior extension of the agreement expired on March 31, which led Bulgarian Minister of Energy and Economy Traicho Traikov to declare just hours ago that the Belene project had reached a "legal vacuum".

The situation has prompted Bulgarian PM Boyko Borisov to suggest that the project might be frozen for 3 months under what he called a "moratorium."

Tuesday the two companies involved agreed until June 30 to make every efforts possible to conduct a thorough analysis on questions related to nuclear and radiation safety, including any new developments of international requirements.

At the same time, all activities on new construction at the Belene site and production of new equipment is frozen for the period of the agreement.

During the negotiations that led up to the deal, NEK and Atomstroyexport also started to discuss an already produced analysis of the safety of the future Belene NPP units in the event of natural disasters.

The Bulgarian and Russian state companies had rushed in closed-door talks in Sofia for a last-ditch effort in the negotiations for the fate of the Belene nuclear power project on March 31, the day when the previous, 11th annex to their main expired.

Up to now, Bulgaria and Russia have been unable to agree on the major bone of contention - the price for the construction of the 2000-MW Belene NPP.

Russia says the project construction price should be EUR 6.3 B. The Borisov government wants to set the price at as little as EUR 5 B.

Earlier, Economy and Energy Minister Traikov has revealed that NEK had submitted to the representatives of Rosatom their draft memorandum at about midnight on Thursday, and was considering Rosatom's response on Friday. The Rosatom delegation is headed by Genadiy Tepkyan, Vice President of Rosatom, who is in charge of the Belene project on part of the Russian state corporation.

Traikov said that, once the memorandum is signed, there should not be any expectations for striking new final agreements on Belene in the next three months, and that Russians understand that the three-month extension is necessary.

At the end of last week Prime Minister Boyko Borisov said that the government will delay its decision whether to go ahead with its second nuclear power plant project or not by at least another three months over concerns about safety and costs.

What is more, after the Fukushima Daiichi NPP in Japan was badly damaged by the March 11 earthquake, Bulgaria's Ministry of Economy, Energy and Tourism submitted to Rosatom 30 questions regarding the safety of Belene NPP.

NEK said that if a new, 12th annex to the Bulgarian government's framework agreement with Rosatom's subsidiary Atomstroyexport from 2006 is signed on Thursday, it will have to be approved by the NEK board and then by NEK's parent company, the Bulgarian Energy Holding (BEH).

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.

According to the non-binding memorandum expiring on March 31, 2011, Bulgaria's NEK will have a share of 51% in the Belene NPP, Rosatom - a share of 47%, Finnish company Fortum - a share of 1%, and French company Altran Technologies - a share of 1% with an option to increase it. Serbia has expressed interest in acquiring a share of 5%-10% but the talks for that have not been finalized yet.

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.

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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Tags: altran, Fortum, Boyko Borisov, Traicho Traikov, NEK, National Electric Company, Atomstroyexport, Belene NPP, Genadiy Tepkyan

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