Socialist Presidential Hopeful: Bulgaria's Belene Nuclear Project Must Start ASAP

Ivaylo Kalfin, former Foreign Affairs Minister, and current Member of the European Parliament, is the presidential candidate of the major opposition force in Bulgaria – the Bulgarian Socialist Party. Photo by BGNES

The project to build a second Nuclear Power Plant in Bulgaria's Danube town of Belene is strategic and must be launched again as soon as possible, according the presidential hopeful, Ivaylo Kalfin.

Kalfin, a former Foreign Affairs Minister, and current Member of the European Parliament, is the presidential candidate of the major opposition force in Bulgaria – the Bulgarian Socialist Party, BSP.

He voiced his firm conviction that in order for the country to keep its leading position as producer of electric power in the region, Bulgaria must finish the second NPP.

"If we stop Belene, we will have to pay damages and claims in the amount of BGN 1 B. We have a permit from the European Union to build an NPP of this type. The later we do it, the less sense the plant will make," the MEP stated.

According to Kalfin, the current cabinet of the center-right Citizens for European Development of Bulgaria, GERB, party, had fiddled around the project in the last two years over lack political will and clarity on the matter.

On the topic of the upcoming elections, Kalfin stated that his main opponent would be the nomination of GERB.

"Whoever he or she is, it is going to be someone close to Prime Minister, Boyko Borisov, someone professing his value and policies," the MEP concluded.

In the past three years, Russia, including directly through its state leader Vladimir Putin, offered Bulgaria funding for the Belene NPP on numerous occasions but both current Prime Minister Boyko Borisov and his predecessor Sergey Stanishev have dismissed such an opportunity.

In the last months of the Stanishev government in early 2009, Russian Prime Minister Putin offered Bulgaria a Russian state loan of EUR 4 B for the Belene plant, which Bulgaria's then 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 the existing non-binding agreements, the Russian government, in addition to constructing the Belene plant, might end up with a stake of 25%-50%.

While the future of the 2000-MW Belene power plant remains hanging in the air, the bone of the latest contention between the Russian Atomstroyexport and the Bulgarian National Electric Company, NEK, is related with equipment for the NPP, whose construction was first started in 1980s.

Atomstroyexport, the company chosen to build the second Bulgarian NPP formally confirmed in late July 2011 that it had filed a lawsuit for EUR 58 M NEK at the International Court of Arbitration in Paris as a result of NEK's failure to pay on time for already completed works.

The lawsuit in question, however, and its potential Bulgarian counterstrike refer to a dispute over equipment delivery payments, and not to the final decision on the fate of the Belene project that the Bulgarian state has to make.

Atomstroyexport claims that it has been completing tasks on the Belene project on credit, on Bulgaria's request, and regardless of its dispute with the Bulgarian government over the price of the NPP, and the need to sign a final construction contract.

NEK has reacted with surprise, and with a threat that it will launch a counter lawsuit against Atomstroyexport worth EUR 61 M that the Russian company owes to it under a contract to buy back the old equipment at the Belene NPP construction site, which has been stored there since 1991. NEK explained that the delayed payments by Atomstroyexport over the contract in question are the reason it terminated its payments to the Russian company - apparently, thus generating the reason for Atomstroyexport's claims.

According to the Bulgarian state electricity company, Atomstroyexport has said in a letter that it deems the Bulgarian claims justified, and offered a new deal for settling the equipment payment questions. NEK has also stated that it is "open for dialogue" for the resolution of the existing problems.

The Russian company Atomstroyexport itself has underscored in a media statement that the lawsuit it filed with the International Arbitration Court "should in no way be viewed as a measure of exerting pressure" in order to force the Bulgarian government to make a final decision on the fate of the vastly troubled and controversial Belene nuclear project.

In the event that the talks between NEK and Atomstroyexport for the overall contract for the construction of Belene fail, the Russian state company will most likely file a EUR 1 B lawsuit against Bulgaria but such a development would not occur before October 2011, if it does at all, because the two governments have negotiated a 3-month extension on the final decision that Bulgaria has to make.

On July 1, NEK and Atomstroyexport signed an annex extending by 3 months their contract for the construction of the Belene NPP, the new "Annex No. 13" to the 2006 contract.

The newly-signed document effectively provides the two parties with a deadline until September 30, 2011, to hammer out answers to questions related with the technical project for the Belene NPP, the market analysis by the project consultant HSBC, and further progress on the contract for construction and supplies, which is to be made more flexible to meet requirements by potential international investors.

However, it does not contain a commitment to a certain deadline for reaching a final construction deal. The greatest issue over which Bulgaria and Russia have been haggling for the past two years under the Borisov Cabinet has been the price of the project, with Russia insisting it should be no less than EUR 6.3 B, while Bulgaria is demanding a price of no more than EUR 5 B.

A provision in the new annex to the Bulgaria-Russia Belene deal provides for the setting-up of a financial working group of the involved parties to clarify the conditions for funding offered by Russia.

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