Bulgarian-Russian Nuclear Project Grows More Mysterious, Set for New Delay

Energy | March 26, 2012, Monday // 15:49|  views

Russian PM Vladimir Putin in Sofia in Nov 2010 when he got a Bulgarian shepherd puppy as a gift from Bulgarian PM Borisov. Photo by BGNES

The fate of the Belene Nuclear Power Plant project, which is supposed to become Bulgaria’s second NPP, has remained even more unclear after Monday’s phone conversation between the prime ministers of Bulgaria and Russia.

After the long-anticipated conversation between Bulgarian Prime Minister Boyko Borisov and his Russian counterpart and President-elect Vladimir Putin, the Bulgarian government press serviced issued a vague release, explaining Borisov had “informed” Putin of the decision of his Cabinet on whether to build the Belene plant, without really specifying what the respective position is.

There had been expectations that the Borisov-Putin call will lead to a “yes” for the 2000 MW plant, whose construction by Rosatom’s firm Atomstroyexport has been delayed with annexes 15 times, or that, alternatively, it would declared the death of the project.

“They have discussed the economic and political relations between the two states. At a convenient time, Boyko Borisov will notify Bulgarian President Rosen Plevneliev and the Members of Parliament about the results from the conversation,” the government said.

Reports say Borisov is to talk with Plevneliev on Wednesday, and will to the Parliament on Thursday, and have added that he probably reiterated his statements that the Belene NPP will be built only if a large-scale private European or American investor becomes involved in it – even though the search for investors has been futile.

At the same time, on Monday, the Russian state upheld its tradition of being less secretive about its energy talks with Bulgaria, with the press secretary of the Russian government Dmitry Peskov announcing, as cited by RIA Novosti, that Putin and Borisov agreed that Bulgaria’s newly appointed Minister of Economy, Energy, and Tourism Delyan Dobrev will make a visit to Moscow as soon as possible.

Dobrev will be in the Russian capital for “detailed” talks on all issues on the bilateral agenda, the website of Russian PM Putin said.

On Sunday, Borisov said in a TV interview that Belene would never remain just a Russian-Bulgarian project and would not go forward without a European or American investor.

A few days ago, his Deputy, Finance Minister, Simeon Djankov, admitted that Bulgaria has "almost given up on the project."

Borisov further voiced some other options such as installing at the existing Kozloduy NPP the first of the Russian-made nuclear reactors slated for Belene, for which Bulgaria has already paid two-thirds of the price.

Russia's Atomstroyexport already announced it has assembled the reactor for the first unit of the NPP to be built in the Bulgarian Danube town of Belene.

Russia's state-owned nuclear corporation Rosatom has made it clear it is ready to agree on yet another extension of the contract with the Bulgarian government for the construction of the Belene nuclear power plant.

The currently active extension of the 2006 deal between Bulgaria's National Electric Company NEK and Rosatom's subsidiary Atomstroyexport is set to expire at the end of March 2012.

"If the mutual requirements are fulfilled, we can discuss an extension but only after we receive the Bulgarian position," Rosatom CEO Sergei Kiriyenko told Interfax on Friday.

"At least once monthly the Bulgarian officials make contradictory statements in the media," he said, reiterating his statement from earlier last week that Rosatom had been tired of waiting for the Bulgarian government to make decisions on Belene project.

Kiriyenko explained that if it gives up on the NPP, Bulgaria can purchase from Atomstroyexport the nuclear reactor that it has produced for the Belene NPP.

At the same time, however, he made clear his doubts about the feasibility of installing the reactor in question at Bulgaria's only existing NPP at Kozloduy, since this could take between 5 and 7 years.

In October 2011, Bulgaria and Russia reached an agreement to extend the negotiations over Belene nuclear project by another six months as of the beginning of October amidst continuing haggling over its price and feasibility.

The contract between Bulgaria's National Electric Company NEK and Russia's Atomstroyexport, a subsidiary of Rosatom, was extended by the end of March 2012.

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.

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 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.

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.

In April 2011, the Bulgarian government formally signed a consulting contract with UK-based company HSBC (which won the tender in November 2010) for the financial analysis for the project for the construction of the Belene nuclear power plant. Bulgaria will be paying HSBC EUR 2 M for its services plus 0.95% of the end price of the Belene NPP if it is realized. This means that if HSBC declares the Belene NPP project to be economically feasible, and it is constructed, it will get a fee of EUR 47.5 M if the plant costs EUR 5 B.

Another important issue plaguing the Belene NPP project that surfaced in the recent week is the mutual financial claims of the two parties over sums allegedly owed for the delivery of new equipment and buyout of old equipment for the future plant, with Atomstroyexport recently filing an EUR 58 M suit against NEK with the International Arbitration Court in Paris, and NEK responding with an EUR 61 M suit in Geneva.

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