BULGARIA FACING EUR 1.5BN FORFEITS FOR BELENE NPP

Energy minister, Russian officials to discuss options for continuing project construction

Rosatom director Sergey Kirienko will offer a EUR 2 billion loan for the construction of Belene nuclear power plant (NPP) at a meeting with Bulgarian minister of economy and energy Traycho Traykov on Friday, the Pari daily learned from Rosatom's office in Moscow. Details about the parameters of the loan were not immediately available but it is known that no state guarantees will be required from Bulgaria.

Visit

Kirienko and Russia's energy minister Sergey Shmatko are coming to Sofia for an urgent meeting with Traykov to discuss the future of the project. According to unofficial information, Kirienko will again suggest that Russia should finance the whole project. However, the Bulgarian government is unlikely to accept such a proposal, as it is arduously trying to reduce this country's dependence on Russia.

Financing

Financing is one of the key obstacles to the project, provided that Bulgaria decides to continue the construction. One of the possible options is for the state to keep 20% in the project and offer the rest 80% on the stock exchange under condition that now investor will buy a package exceeding the Bulgarian stake in the project. Some nuclear experts say that is the best option for Bulgaria. Others, like Bulatom chairman Bogomil Manchev, believe Bulgaria should have 51% in the NPP to retain control.

Forfeits

The financial claims of contractor Atomstroyexport may reach EUR 1 or 1.5 billion if Bulgaria gives up the project, Bulatom executive secretary Stanislav Georgiev pointed out. The forfeits will be sought for lost revenue, since the installation of the equipment takes four or five years and most probably the Russian company has already started production. Bulgaria's National Electric Company (NEK) will have to pay forfeits for about EUR 800 million, minister Traykov said last September.

Price

The framework agreement on the construction of Belene NPP, which was signed between NEK and Atomstroyexport in 2008, sets a price of EUR 3.997 billion. The amount does not include some of the open-air operations, nor the price of fuelling the new plant. It should be also noted that the end price of Belene NPP is likely to rise because the agreement does not specify the financing source and costs. The maximum price of the project is EUR 8.5 billion, according to the project consultants. The chairman of the parliamentary economic committee, Martin Dimitrov, forecasts a price of some EUR 10 billion.

Bulgaria has so far spent a total of EUR 480 million on the project. That includes advance payments for equipment, consulting services, concept and technical design.

Alternative

Some EUR 1 to 1.5 billion will be saved if Bulgaria builds additional units at Kozloduy NPP instead of Belene, the chairman of Bulgarian Energy Forum, Ivan Hinovski, said. Building a seventh reactor is much cheaper but Bulgaria does not need even a new unit at Kozloduy, said Martin Dimitrov. We have enough energy production facilities.