Nuclear negotiations
Two successive Bulgarian cabinets have pushed ahead with efforts to resurrect communist-era plans for a second nuclear power station, but the fate of the planned plant now lies in the hands of the next government, media reports have claimed.
The contract with Russia’s Atomstroyexport, which will provide the twin 1000MW reactors for the Belene power station, stipulated a fixed cost of just less than four billion euro, but allowed for adjustment in line with inflation. The precise amount, however, has now become the subject of protracted negotiations.
Bulgaria’s deal with Russia, finally signed in January 2008, more than a year after Atomstroyexport was picked to build the power plant, reportedly said that the figure would be the average inflation in the European Union, as calculated by the bloc’s statistics bureau Eurostat. Atomstroyexport, however, now wants Russian inflation to be used instead for all equipment made in Russia, Dnevnik daily reported on May 28, quoting sources familiar with the talks.
Negotiations have reached a stalemate and the option of scrapping the project altogether has been discussed in earnest, the newspaper said. German utility RWE, picked to buy 49 per cent in the company that will build the power station, is committed to Belene, but has made its participation conditional on settling all the financial details by mid-2010.
Any deal before the Parliament elections in July was unlikely, Dnevnik said. The outcome of the polls remains uncertain, as does Belene’s future.
Sofia mayor Boiko Borissov’s party, the Citizens for the European Development of Bulgaria (abbreviated as GERB in Bulgarian), leads in the opinion polls. Presenting the party’s economic policy plans, Borissov said on June 1 that GERB would endorse the project only if it was fully funded by private investors. The right-wing Blue Coalition, seen as a likely ally in a GERB-led ruling coalition, has been even more scathing in its assessment, saying the project had too many environmental question marks and that it would further deepen Bulgaria’s dependence on Russian energy resources.
Funding lifeline
Delaying construction work on Belene by a year or two would not only increase costs by 20 to 25 per cent, but also result in about a billion euro of lost revenue, the head of the Government committee overseeing the project, Ivan Atanassov, told an international forum on nuclear energy on May 28. The project is already nine to 11 months behind schedule, he said.
Preparatory work on the Belene site has been underway since September 2008, funded by a 250 million euro bridge loan from BNP Paribas and 300 million leva from the Government. The European Commission is yet to rule whether the Cabinet’s cash injection was justified under the EU’s state aid rules.
BNP Paribas has also been retained to secure private funding for the project, but the lender has had little success in its task, hampered by the continued cash squeeze. Concerns about the projects viability and environmental impact have not helped Belene’s case. Bulgaria’s power grid operator NEK, which owns 51 per cent in the future power station, can extend BNP Paribas’ mid-2009 deadline, which RWE has already agreed to, Atanassov was quoted as saying.
The Russian government remains the only willing lender. In addition to a 3.8 billion euro export loan now being negotiated, state-owned electricity trader Inter RAO was one of the companies with which RWE was negotiating the sale of 24.5 per cent in the project.
Analysts have explained Russia’s eagerness to fund Belene with Kremlin’s desire to showcase the third-generation VVER reactors in the EU just as the nuclear power revival in the bloc is picking up steam.
For Bulgarian politicians, Belene is the best opportunity to reclaim its previous place as the biggest electricity exporter on the Balkans, or so it seems. Bulgaria lost that status when it was forced to shut down four units at the Kozloduy nuclear station, with a total capacity of 1760MW, before it could join the EU.
But some analysts have questioned such ambitious undertakings, given that other countries in the region have also announced plans to expand their power generation capacity, including Romania and Turkey, who want to build new nuclear reactors.
The contract with Russia’s Atomstroyexport, which will provide the twin 1000MW reactors for the Belene power station, stipulated a fixed cost of just less than four billion euro, but allowed for adjustment in line with inflation. The precise amount, however, has now become the subject of protracted negotiations.
Bulgaria’s deal with Russia, finally signed in January 2008, more than a year after Atomstroyexport was picked to build the power plant, reportedly said that the figure would be the average inflation in the European Union, as calculated by the bloc’s statistics bureau Eurostat. Atomstroyexport, however, now wants Russian inflation to be used instead for all equipment made in Russia, Dnevnik daily reported on May 28, quoting sources familiar with the talks.
Negotiations have reached a stalemate and the option of scrapping the project altogether has been discussed in earnest, the newspaper said. German utility RWE, picked to buy 49 per cent in the company that will build the power station, is committed to Belene, but has made its participation conditional on settling all the financial details by mid-2010.
Any deal before the Parliament elections in July was unlikely, Dnevnik said. The outcome of the polls remains uncertain, as does Belene’s future.
Sofia mayor Boiko Borissov’s party, the Citizens for the European Development of Bulgaria (abbreviated as GERB in Bulgarian), leads in the opinion polls. Presenting the party’s economic policy plans, Borissov said on June 1 that GERB would endorse the project only if it was fully funded by private investors. The right-wing Blue Coalition, seen as a likely ally in a GERB-led ruling coalition, has been even more scathing in its assessment, saying the project had too many environmental question marks and that it would further deepen Bulgaria’s dependence on Russian energy resources.
Funding lifeline
Delaying construction work on Belene by a year or two would not only increase costs by 20 to 25 per cent, but also result in about a billion euro of lost revenue, the head of the Government committee overseeing the project, Ivan Atanassov, told an international forum on nuclear energy on May 28. The project is already nine to 11 months behind schedule, he said.
Preparatory work on the Belene site has been underway since September 2008, funded by a 250 million euro bridge loan from BNP Paribas and 300 million leva from the Government. The European Commission is yet to rule whether the Cabinet’s cash injection was justified under the EU’s state aid rules.
BNP Paribas has also been retained to secure private funding for the project, but the lender has had little success in its task, hampered by the continued cash squeeze. Concerns about the projects viability and environmental impact have not helped Belene’s case. Bulgaria’s power grid operator NEK, which owns 51 per cent in the future power station, can extend BNP Paribas’ mid-2009 deadline, which RWE has already agreed to, Atanassov was quoted as saying.
The Russian government remains the only willing lender. In addition to a 3.8 billion euro export loan now being negotiated, state-owned electricity trader Inter RAO was one of the companies with which RWE was negotiating the sale of 24.5 per cent in the project.
Analysts have explained Russia’s eagerness to fund Belene with Kremlin’s desire to showcase the third-generation VVER reactors in the EU just as the nuclear power revival in the bloc is picking up steam.
For Bulgarian politicians, Belene is the best opportunity to reclaim its previous place as the biggest electricity exporter on the Balkans, or so it seems. Bulgaria lost that status when it was forced to shut down four units at the Kozloduy nuclear station, with a total capacity of 1760MW, before it could join the EU.
But some analysts have questioned such ambitious undertakings, given that other countries in the region have also announced plans to expand their power generation capacity, including Romania and Turkey, who want to build new nuclear reactors.