Deja Vu: Russia Threatens to Dump N-Project in Bulgaria

The Belene nuclear power plant has been de facto frozen since the fall of 2009 when the previously selected strategic investor, the German company RWE, pulled out. Photo by Sofia Photo Agency

Russia is acting once again perplexed as to whether to proceed with the construction of the second Bulgarian nuclear power plant Belene or nix the deal and seek penalty payments from Sofia.

"Getting out of the project is inevitable if there is no progress in the negotiations with our Bulgarian partners", Russian newspaper Nezavisimaya Gazeta reported on Tuesday, citing an unnamed source from the company.

According to the report the decision can be expected in November this year.

"Moscow and Sofia talk with each other in the language of ultimatums and judicial actions," writes the newspaper.

Two weeks ago Russia's state nuclear company Atomstroyexport took Bulgaria's NEK to an arbitration court for EUR 58 M over delayed payments for its work on two nuclear reactors.

The next day the Bulgarian company said it is ready to strike back with a EUR 61 M counter claim against Atomstroyexport over delayed payments for purchases of old equipment for the plant, worth about EUR 300 M.

According to the Russian newspaper this is the first time that Moscow makes this move.

"Up till now, the conflicts that have arisen in the implementation of international nuclear projects have been solved through negotiations, but in this case Bulgaria is not willing to accept a compromise," the newspaper comments.

According to Nezavisimaya Gazeta negotiations with Moscow have been taken to a new stage following the statement of Bulgarian Economy Minister Traicho Traikov, who said his country has given an ultimatum to Russia over Belene nuclear power plant project.

The last time the same threat raised its ugly head in Russia's newspapers was in the middle of February, when a "breakup" between Bulgaria and Russia over the "long-suffering project" was said to be highly likely as the sides have failed to agree on a final price and a funding mechanism.

In the middle of June Bulgaria said that Belene nuclear project will be frozen for another three months as of July to have time to catch up with the back office work and get more information about the cost of the project.

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.

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 has been de facto frozen since 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.

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