More than two decades after the start of the construction of the second Bulgarian nuclear power plant at Belene on the Danube River and 17 years after the project was shelved because of the oppositon of local residents, the ground for the new power station was broken on September 3 2008.

The power station gave new scope to Bulgaria’s energy sector, Prime Minister Sergei Stanishev said during the official ceremony. “The development of the Belene nuclear power plant and our nuclear energy sector will make us a lot more independent,” he said. “It is clear for everyong that without developing nuclear energy, there is no way of dealing with climate change. This is the biggest project Bulgaria has undertaken in the past 18 years.”

Leonid Reznikov, the president of Russia’s Atomstroyexport, picked to build the power station, said that it would become one of the most reliable and safe stations, using top Russian technologies. The project, which he described as a European-Russian one, would guarantee Bulgaria’s nuclear security.

Belene’s twin 1000MW reactors will be built by Atomstroyexport, controlled by Russia’s state-owned energy giant Gazprom, with France’s Areva and German technology firm Siemens as subcontractors.

Bulgaria’s state-owned power grid operator National Electricity Company (NEK), which will own 51 per cent in the power station, will have to secure a similar cut of funding for it. Bulgaria’s Cabinet is still to pick a strategic investor for the remaining 49 per cent. Belgium’s Electrabel and German RWE, the two finalists in NEK’s tender for the stake, have both filed their final bids before the deadline in end-June, but Bulgaria’s Economy and Energy Ministry is reportedly holding out for further improvements in the price offered and has recently extended the deadline for choosing the strategic investor to September 15 2008.

Both bidders are big names on the European energy scene. Electrabel, owned by French utility giant GDF-Suez, is the largest power company on the Benelux market and has a power generation capacity of 31 000MW in Europe. RWE’s operations span Germany, Britain, Czech Republic, Poland, the Netherlands, Hungary and Slovakia. The German giant was reported to be considering dropping out of the race, according to German media, re-affirmed its committment to Belene earlier in the summer.

Atomstroyexport has until the end of 2008 to present the complete technical project of the new nuclear power station to Bulgaria’s Nuclear Regulatory Agency (NRA) for approval. NRA has not yet issued a statement on the project for Belene nuclear power station, which means that the groundbreaking ceremony would not be followed by any construction activity for months to come.

As such, the ceremony was merely a government media stunt designed to stem popular ill-feeling against it, Petko Kovachev of BeleNE (No to Belene) environmentalist coalition said. The coalition believes Belene to be a dangerous seismic area, based on geological surveys carried out in the 1980s, dismissing more recent reports by the Bulgarian Academy of Sciences as biased and politically-motivated.

Economy Minister Petar Dimitrov, speaking to private broadcaster bTV a few hours before the ceremony, shrugged off the criticism, saying that concrete for the first unit of the power station would be poured before “the first snow”, with concrete for the second reactor scheduled to be poured in March 2009. The first unit should become operational by December 2013, followed by the second one in July 2014.

The price of construction, fixed in the contract Bulgaria signed with Atomstroyexport in January, is 3.997 billion euro, while the price of the electricity that would be produced by Belene power plant is expected to be about 3.7 euro cents a kWh. The total costs of the project have been estimated to run closer to seven billion euro, if not more, given the rising prices of construction materials and the high costs of borrowing on international markets. Even French bank BNP Paribas, picked to structure financing for the project, was reported in July to have declined to commit any of its own money to fund it.