Two Indicted in Bulgaria over Nuclear Plant Deal with Russia

Business » ENERGY | October 17, 2016, Monday // 11:08| Views: | Comments: 0
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Bulgaria: Two Indicted in Bulgaria over Nuclear Plant Deal with Russia File photo, BGNES

The Sofia City Prosecutor's Office has formally indicted two former state officials over their move to sign an unfavourable contract with Russian company Atomstroyexport in 2007.

The document, under which Bulgaria procures equipment for the Belene nuclear power plant (NPP) project, was signed without the government's consent.

Lyubomir Velkov and Mardik Papazyan, who were first targeted by the prosecution back in 2012, are now placed under a recognizance order.

The prosecution alleges that the two wrought damages of more than EUR 77 M to the National Electricity Company (NEK) which they were heading at the time as executive officials.

"[Through] the unfavourable contract the two obligated NEK to take on all the costs of carrying out the contract and reduce by the value of these costs the price paid by Atomstroyexport for the equipment of Belene NPP," the prosecuting authority says.

NEK's "obligations" include bearing the cost of examination, insurance, packaging and transport of equipment and technical documentation on behalf of the buyer.

Velkov and Papazyan, in office between 2005 and 2009, brought forward the tenders for Belene NPP project's design and construction. They were later dismissed after Boyko Borisov's GERB party swept to power for the first time in 2009.

They maintain that construction standards under Bulgarian law are "too narrow" as regards the building of nuclear plants.

After it was first started in the 1980s, the construction of Bulgaria's second nuclear power plant at Belene on the Danube was stopped in the early 1990s over lack of money and environmental protests.

After selecting the Russian company Atomstroyexport, a subsidiary of Rosatom, to build a two 1000-MW reactors at Belene and signing a deal for the construction, allegedly for the price of EUR 3.997 B, with the Russians during Putin's visit to Sofia in January 2008, in September 2008, former Prime Minister Stanishev gave a formal restart of the building of Belene. At the end of 2008, German energy giant RWE was selected as a strategic foreign investor for the plant.

The Belene NPP has been de facto frozen since the fall of 2009 when the previously selected strategic investor, the German company RWE, which was supposed to provide EUR 2 B in exchange for a 49% stake, pulled out.

Shortly afterwards BNP Paribas SA, France's largest bank by market value, who was hired by the previous Socialist government to help fund the construction of Belene, ditched the project in February 2010.

RWE's departure from Bulgaria's new Belene nuclear plant put extra pressure on the new center-right government to find new shareholders while it redefines the scope of investment it needs.

The project was later abandoned by Borisov's first government. Bulgaria is now forced to pay hundreds of millions of EUR to Atomstroyexport under an arbitration ruling. Upon payment for part of construction costs and production work, it will receive a nuclear reactor and equipment produced for the plant.

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Tags: Belene, Belene NPP, nuclear, Lyubomir Velkov, Mardik Papazyan, Russia, Atomstroyexport
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