Russia Strikes Back at Bulgaria over Belene NPP Price, RWE Quitting

Business | January 22, 2013, Tuesday // 19:17| Views: | Comments: 2
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Bulgaria: Russia Strikes Back at Bulgaria over Belene NPP Price, RWE Quitting The site of Bulgaria's frozen second NPP at Belene. Photo by BGNES

The proposed price for the construction of two 1000 MW units of what was supposed to become Bulgaria's second nuclear power plant, Belene, was EUR 6.3 B, not EUR 10 B, as Bulgarian Prime Minister Boyko Borisov claims, Russian state company Rosatom stated on Tuesday.

The reaction of the Russian firm, whose subsidiary Atomstroyexport was supposed to build the Belene NPP before the Borisov Cabinet terminated it almost a year ago, comes after on Monday the Bulgarian government revealed secret documents from the Economy Ministry demonstrating why German energy company RWE quit Bulgaria's nuclear project in 2009.

According to Rosatom spokesperson Sergey Novikov, Bulgarian PM Boyko Borisov's statements that the planned price for the construction of the Belene nuclear plant was EUR 10 B are extremely perplexing.

"The statements of the Bulgarian government that the price of the Belene NPP was EUR 10 B are a matter of speculation with numbers. If we count in the adjacent infrastructure of the project – power lines, a new town, we can boost the sum as much as we wish. But it is not right to include all that in the price of the nuclear plant," Novikov stated, as cited by ITAR-TASS.

He further noted that during Bulgarian-Russian talks over the price of the Belene NPP back in 2010, Bulgaria's Cabinet demanded that it should not invest any money in the project, and that as a result Russia offered to fund the construction of the plant by itself.

Novikov claimed that under the proposal, Bulgaria was supposed to get a 51% share in the plant, and to cover its cost with the revenues from electricity for a period of about 19 years.

"That way not a single lev from Bulgaria's budget would have been spent," he commented.

In his words, however, during talks in Moscow in 2010 Bulgaria held a "weird position" by saying that when the NPP starts working on Bulgarian territory, all of its revenues should go to the state budget.

"We were offering to build a NPP that produces electricity that we could sell and profit from after paying off all the participants in the project," Novikov added.

He stressed that the decision not to take this "beneficial opportunity" was made solely by the government of Bulgarian PM Boyko Borisov, not by his predecessor Sergey Stanishev.

A day earlier, Borisov said German utility RWE abandoned plans to participate in the construction of a 2000MW nuclear plant in the Bulgarian Danube town of Belene after realizing that its price tag has towered to EUR 10 B.

This allegedly emerged from a letter by the major German company to Bulgaria's state energy holding company NEK, dated 2008, which Prime Minister Boyko Borisov made public on Monday.

The letter was discovered by accident by Economy and Energy Minister Delyan Dobrev, tucked in a box, holding strictly confidential information, where the previous government hoped it will remain unseen, Borisov said.

In the letter RWE draws attention to the fact that NEK still has not made clear how it ill finance its share of the project worth EUR 5 B. The German company voices strong protest against plans for signing the fifth agreement with Russia for the project and commits to contribute up to EUR 10 M in it in 2009.

The previous Socialist-led government chose in 2009 German power utility RWE to become a strategic partner in the Belene project with a stake of 49%.

The next year however the German utility abandoned plans to participate in the construction of a 2000MW nuclear plant in Belene "due to funding problems".

Speaking on Monday, Prime Minister Borisov slammed the previous government for hiring BNP Paribas SA, France's largest bank by market value, to arrange a EUR 250 M loan to help fund construction of the nuclear power plant, whose price tag has towered from EUR 4 B to EUR 10 B.

NEK's poor results, triggered by a fall in power consumption, however forced it to breach the conditions on the loan, making it callable.

BNP Paribas SA, France's largest bank by market value, ditched the project in February 2010.

Bulgaria's state energy holding company, which groups the country's top energy assets, plans to tap international markets by the beginning of March to repay its debt.

The group aims to issue EUR 400 M worth of bonds, much higher than the initially set targets of USD 300 M or EUR 250 M.

The money will be used for refinancing the existing debt to BNP Paribas for the nuclear power plant project at Belene.

Borisov's statement comes days before Bulgarians head for the voting polls to cast a ballot in the country's national referendum on development of atomic energy.

The voters will receive a white ballot with the question "Should atomic energy be developed in Bulgaria through the building of a new Atomic Plant?" There will be an option to choose "yes" or "no" by using a blue ink pen.

Under current legislation in order to have a valid referendum at least 4 345 500 people must cast a ballot which is equal to the voter turnout at the last general election. A positive answer to the question of the referendum requires 50% of the vote plus 1 ballot.

The referendum on atomic energy, excluding the local one on the Burgas-Alexandroupolis oil line, is the first since the fall of the Communist regime in 1989. Before that national referendums have been held in 1922 – for the punishment of those responsible for the two national catastrophes; in 1946 – to change the rule of the country from monarchy to republic, and in 1971 for the so-called Zhivkov Constitution of Communist dictator, Todor Zhivkov.

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Tags: Belene, RWE, Atomstroyexport, BSP, government, BNPP, Bulgarian Energy Holding, NEK, Belene NPP, Atomstroyexport, Rosatom, Russia, Sergey Novikov
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» To the forumComments (2)
#2
mattbg - 22 Jan 2013 // 21:40:32

isn't this the whole point? the original "planned" price was 4bn, then the russians next "planned" price when it's almost too far gone to exit is 6bn, and the REALISTIC estimated price by the germans is close to 10bn.... perhaps the russians should guarantee the price will never ever exceed the original 4bn, and then they'll have investors biting their hand off. not going to happen though.

it would be very interesting to see where all of the money already spent has gone - i'd imagine there's a lot of current and ex politicians with large engineering consultancy fees who have qualifications very similar to mr dogans....

#1
Richie - 22 Jan 2013 // 21:15:32

A payback time of 19 years means a return on investment of 5.25%. My bank gives more...

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