BULGARIA CONSENTS TO LOAN FROM RUSSIA FOR BELENE NPP

Government aims to make project attractive for strategic investors.

Bulgaria will take Russia's EUR 2 billion loan for the construction of Belene nuclear power plant (NPP). That emerged after the head of Russia's state nuclear energy corporation Rosatom, Sergey Kirienko, announced that Russia wants neither state, nor corporate guarantees. Kirienko and Russia's energy minister Sergey Shmatko met on Friday with Bulgaria's minister of economy and energy Traycho Traykov.

The financing will help continue the plant's construction by Russia's Atomstroyexport until a new strategic investor is chosen. Par of the loan will be repaid by the future investor, the remainder will be transformed into Russian equity in the future plant. The parameters of the loan are yet to be agreed. Earlier on Friday finance minister Simeon Dyankov stated he will not give a state guarantee for the project.

Financing

Bulgaria cannot continue financing the project, minister Traykov admitted. The majority owner of the plant, National Electric Company, is short of fund. The selected strategic investor, Germany's RWE, withdrew from the project a year ago. Prime minister Boyko Borisov's visits to France, the USA and Germany, where he urged the big energy companies to join the project, turned out fruitless. Therefore the government accepted the proposal that Moscow should provide financing until a strategic investor is found, Bulgarian Energy Forum chairman Ivan Hinovski told the Pari daily.

We will give as much money as necessary, Rosatom general director Kirienko pointed out. According to the Russian company, some EUR 700 or 800 is necessary for the project in 2010. Since it is the end of February already, EUR 300 or 400 will suffice until the end of the year, he added. The amount will be used for purchase of the necessary equipment. It will be manufactured in Russia, Germany and France. The financial needs in 2011 will depend on the volume of works but it will probably range between EUR 1 and 1.5 billion, Kirienko said.

Consultant

The Bulgarian Energy Holding published on Friday an announcement for selection of a consultant for Belene NPP, Traykov said after the meeting with the Russian officials. The consultant will have to prepare the tender for strategic investor, which will take about a year, he added.

I expect large western banks to apply for consultants, Hinovski pointed out. In his words, if the future investor is a Russian company that may be very dangerous, because it may turn out that Russia will sell Bulgaria electricity.
Belene NPP should become attractive for strategic investors. Therefore a design company will be set up and all Bulgarian assets, all that has been paid so far, will be contributed into it, Traykov explained. For the purpose an assessment will be made of all tangible and intangible assets. The company will be financed by the Russian party, Traykov said. The new entity will be able to use debt financing to raise its capital and determine the value of Bulgaria's equity.