Bulgaria, Russia in New Clash over Nuclear Project Delay

Energy | June 24, 2011, Friday // 14:11|  views

Rosatom head Sergey Kirienko and Bulgarian Economy and Energy Minister Traicho Traikov exchange seemingly loving looks at a forum in Sofia on Nov 30, 2010. 5 months later Bulgaria and Russia have not reached an agreement over the price of Belene.

Much to the surprise of the government in Sofia, Russia has announced it has not been informed of Bulgaria's decision to freeze Belene nuclear project for another three months as of July.

"Rosatom has not received Bulgaria's proposal for freezing talks on Belene", the CEO of the Russian state company, contracted for the construction of the nuclear plant, Sergey Kirienko said in Moscow.

The statement however was refuted by Economy and Energy Minister Traicho Traikov, who said the Bulgarian side has done this more than a week ago.

According to Traikov, the authorities in Sofia have not received answers to questions they have put forward.

"They [the Russians] did not answer the question whether it is true that they have started to produce equipment that has not passed a quality check, nor did they respond to our request for breaking the price or to our request to freeze the project," the Bulgarian minister explained.

The escalation of tensions between Sofia and Moscow comes exactly a week after Bulgaria demanded that Belene nuclear project is frozen for another three months as of July so that the government has time to catch up with the so-called back office work.

"We need additional information about the cost of the project, because what we have received so far from the Russian side has not been satisfactory," said Traikov.

He added that negotiations for a new contract with Moscow for the construction of Belene can continue even while the project, which has hit a snag over safety, financial and price concerns, is frozen between July and September.

Asked by journalists whether Bulgaria faces the risk of being taken to arbitration by the Russian contractor Rosatom as it is likely to miss the July 1 deadline for signing a final agreement for its construction, Minister Traikov said:

"The arbitration is not a risk, it is an option."

The 12th annex to the main contract between Bulgaria and Russia on the construction of two 1,000 megawatt nuclear reactors at Belene, in the north, will expire at the end of June.

The Bulgarian side apparently wants to steer clear of rushing for last-ditch effort in the negotiations with the Russian state nuclear corporation Rosatom for the fate of the Belene nuclear power project.

The annex triggered a huge scandal at the beginning of April after the head of the national utility company NEK Krasimir Parvanov signed an agreement with Rosatom's subsidiary Atomstroyexport that potentially threatens Bulgaria's national interests by obliging the Bulgarian government to reach a final agreement with the Russians on Belene by July 1, 2001.

Traikov slammed Parvanov and announced he is going to be fired, but the dismissal was later overturned by Prime Minister Boyko Borisov.

Borisov harshly criticized the Energy Minister's hasty and emotional reaction and threatened him with being kicked out of office.

It turned out that Parvanov has coordinated his actions with Deputy Prime Minister, Simeon Djankov, who oversees finance and economy.

The signed document stirred heated debates in Bulgaria as it came before the two sides agree on the price of the project and conduct safety checks.

Bulgaria and Russia are 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.

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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