Bulgaria, Russia Put Belene Nuclear Project On Hold Till Spring

Bulgaria and Russia agreed on Friday (September 30th) to postpone by six months a final decision on the construction of a planned 2,000MW nuclear power plant in the town of Belene, on the Danube River.

Announcing the deal, Bulgaria’s state-run National Electric Company (NEK) said it had signed a new annex with Russia’s Atomstroyexport, extending the validity of the contract they concluded five years ago till March 31st 2012.

By that time, the Russian and Bulgarian working groups are expected to complete the economic feasibility study for the plant, according to the company’s statement Friday. Meanwhile, they will also try to clarify the financial aspects of the project and will consider the finance structuring proposal submitted by British consultant HSBC, NEK explained.

A further reason for seeking the six-month extension was to give Bulgaria time to analyse the results of the stress tests on European nuclear plants that the EU is expected to announce in December.

Bulgaria contracted Atomstroyexport, a subsidiary of Russian energy corporation Rosatom, to design and build its second nuclear facility, 100km east of the existing one at Kozloduy in November 2006. The formal start of activities to implement the Belene project was given in September 2008, eight months after Bulgaria’s former Socialist-led coalition government concluded an agreement on it during then-Russian President Vladimir Putin’s official visit to Sofia.

Work on the planned facility was effectively frozen in late 2009, after the main investment partner in the project, Germany’s RWE, pulled out of it. The withdrawal of the Essen-based company, which was supposed to provide 2 billion euros in exchange for its 49% stake in Belene, came amid signals from Sofia about the future of the plant, which will further increase the country’s energy dependence on Russia.

The new government of Bulgaria’s centre-right party GERB that came to power following the July 2009 parliamentary elections also insisted that the project construction price, set at 6.3 billion euros by Russia, should not exceed 5 billion euros.

In the absence of an agreement on that key issue, Atomstroyexport filed a lawsuit against NEK at the International Court of Arbitration in Paris in July, claiming the Bulgarian company owed it 58m euros in delayed payments.

In response, NEK immediately threatened to lodge a counter-suit for 61m euros in delayed payments for equipment purchases.

That same month, the two companies signed the 13th annex to their 2006 contract extending its validity until September 30th.

Ahead of Friday’s signing of Addendum 14, Bulgarian Energy Minister Traicho Traikov said that the initial conclusions made by HSBC suggested that there were ways to make the project profitable, but that further detailed negotiations were needed.

The latest annex was signed ahead of the October 23rd elections to pick the successor of Bulgaria’s incumbent President Georgi Parvanov, a former leader of the Bulgarian Socialist Party (BSP) and one of the country’s staunchest supporters of building the Belene NPP.

GERB presidential candidate Rosen Plevneliev, who is expected to win the post in a runoff, said recently that he currently can neither support nor reject the project.

He noted that he will not decide before “all facts, figures, pluses and minuses, short and long-term effects have been put on the table”.