Bulgaria Secures German Investor for Belene Nuclear Plant Energy

Monday, October 25, 2010

Bulgarian Parliament Chair Tsacheva has made promising hints about the fate of the Belene nuclear power plant. Photo by BGNES

Bulgarian will for sure build its second nuclear power plant at Belene, Parliament Chair Tsetska Tsacheva has declared.

After Bulgaria's government of the center-right GERB party has been going back and forth for months on whether the Belene Nuclear Power Plant will be constructed, in the past couple of days both Prime Minister Borisov and Economy Minister Traikov made hints in favor of the nuke.

On Sunday, however, Parliament Chair Tsacheva made more definitive statements.

"After the visit of Prime Minister Borisov to the Free State of Bavaria, we now have more specifics about the availability of a strategic European investor from Germany," Tsacheva stated in Gorni Dabnik, Pleven District, during the celebrations of the 133 years since a Liberation War battle that took place there.

"For the Bulgarian government, it was extremely important to secure the participation of a strategic European investor. We now almost certainly found one," she said.

Tsacheva also revealed that the question about an European investor for the Bulgarian NPP Belene on the Danube was "discussed very seriously" at the dinner that Borisov and German Chancellor Merkel had during the latter's recent visit to Sofia.

"I declare that the Belene project will be realized for certain!" Tsacheva told the people in Gorni Dabnik.

"The thing that is important to know about the Belene NPP is that it will substantially cheaper in comparison with the plans of the previous Bulgarian government," she went on further without clarifying her words, which seem perplexing given that the Borisov government revised the estimates of the previous government of Sergey Stanishev, and came up with twice higher figures.

The Parliament Chair also said the negotiations between the governments of Bulgaria and Russia for the construction of the Belene nuke are in a very advanced phase.

Bulgaria started building its second nuclear power plant at Belene on the Danube in the late 1980s but after the fall of the communist regime in 1989 environmental protests led to the freezing of the project. It was technically unfrozen by the Stanishev government in 2008, which made a deal with Russian state company Atomstroyexport for the construction of two 1000 MW VVER reactors at Belene for an estimated price of EUR 3.997 B.

Bulgaria's state National Electric Company NEK was supposed to have a stake of 51% in the future plant, and the German company RWE was picked as a strategic investor with a 49% stake in exchange for providing EUR 2 B for the construction.

As the Borisov government took over in the summer of 2009, it said the plant could cost as much as EUR 10 B, and for months was hesitant about whether to even consider the project. PM Borisov claimed the former government used the project to drain funds from the state budget saying that about BGN 1 B had already been squandered on it so far without building anything.

A further blow was the decision of RWE to withdraw in the fall of 2009. Russia offered several times state-guaranteed loans for the construction of Belene of EUR 2-4 B but both Stanishev and Borisov refused those.

Since the spring the Borisov government came up with the position that the Belene NPP will be built only on the condition that the Cabinet finds a "strategic" European investor. The government has made it clear that the state company NEK did not necessarily have to keep a majority stake in the plant, and could settle, for example, for 20%.

The Russian state-owned company Rosatom, the parent of Atomstroyexport, at times has floated the idea of acquiring itself a stake in the future Bulgarian NPP but that has not been taken up by Borisov's team.

In September, China's Prime Minister Wen Jiabao said China was ready to invest in Belene on the condition that the Russian technology is abandoned for Chinese technology – something the Bulgarian government is unable to do as it has a contract with Russia.

Serbia has backed the Bulgarian plans for the Belene nuclear plant, with President Boris Tadic saying that Serbia will like to participate in the project with a 2%-5% stake. There have been reports that the Serbian participation could be funded by Chinese investors.

As the 2-year preliminary contract for the construction of Belene between NEK and Atomstroyexport expired at the end of September, the parties have agreed to extend it by 6 more months in order to have time for negotiations and reaching a final agreement.

The Borisov government is said to be demanding from the Russians a fixed price for the construction of the plant of not more than EUR 7 B, in order to avoid any "escalation costs" triggered by inflation or other factors. According to recent reports, the Russians would offer a price that is about EUR 800 M higher than the one desired by the Bulgarian government.

On Sunday, however, Parliament Chair Tsacheva expressed confidence that the two parties are very close to reaching an agreement.

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