BULGARIA'S POWER ENGINEERING PAYS URGENTLY DEBTS WITH… DEBTS
Shortly before the start of the long four-day weekend on occasion of Bulgaria's Independence Day, the state authorities and that country's National Assembly took a very important and expensive decision - to borrow a state loan to the Bulgarian Energy Holding and its subsidiary the National Electric Company. Thus, NEC would be able to pay its debt to the Russian Atomstroyexport which already manufactured two nuclear reactors and equipment for the second Bulgarian nuclear power plant in Belene.
This is a very long story, full of political conflicts. It dates back to the end of the 20th century. However, an international court ruled that Bulgaria should pay the Russian company EUR 620 million for those nuclear reactors. Moreover, it has to pay an interest of EUR 167,000 for every day of delay. Five years ago Bulgaria's National Assembly banned the construction of a second NPP, following a national referendum on that topic. It turned out that those two nuclear reactors are unnecessary and Sofia merely does not know what to do with them now. Bulgaria has several options to find a way out of that complicated situation, but nothing has been done so far. However, the debt owed to the Russian company is quite real and has to be paid off soon, because the interest rate on that amount is quite high. The Bulgarian Energy Holding and the National Electric Company do not have the necessary financing, because earlier this year they had to pay off their debt to the US-owned thermal power plants in Maritsa East basin to the tune of EUR 525 million. NEC borrowed money from an international banking group due to the lack of own resource. Practically, it has to pay two debts at the same time- to the Russian company and to the US-owned companies. The debts exceed the annual budget of the Bulgarian Ministry of Defense and the Bulgarian Ministry of Interior altogether.
Bulgaria's cabinet and that country's National Assembly decided to intervene urgently and pay the two Russian reactors with money from the state budget, in order to prevent possible bankruptcy of the National Electric Company and avoid paying very high interest rates for too long. The state assistance was provided to a public enterprise without the necessary permission from Brussels and the EC may impose sanctions on Bulgaria later. However, it will take at least two months for the EU officials to decide whether to approve that move or not. Meanwhile, Bulgaria will have to pay interest for each day of delay.
Moreover, the Bulgarian Energy Holding owes EUR 90 million to Kozloduy NPP as well. However, production and consumption of electricity in that country have dwindled gradually and the export of electricity has been also fluctuating. It affects the revenues of the National Electric Company and it is hard to say how long the state measures will be able to keep that company alive. NEC is yet to look for EUR 2.7 billion to pay for the decommissioning of the four Russian nuclear reactors in Kozloduy nuclear power plant.
