The German company RWE may quit the construction projects of the Bulgarian Belene nuclear power plant.

The company's plans have been announced by Juergen Grossmann, chief executive officer of Germany's second-biggest utility, the Bloomberg agency reported.

The main reason for the move is the rising costs, Handelsblatt reported, citing unnamed officials at the company.

Bulgaria's previous Socialist-led government chose last year German power utility RWE to become a strategic partner in the Belene project with a stake of 49%.

Bulgaria intends to cut its shares in the project from 51% to 20-30%, which will still allow the country to keep its blocking quota.

State power utility NEK has a majority stake in the plant and has contracted Russia's Atomstroyexport to build the two 1 000 megawatt reactors.

According to reports and non-governmental organizations, however, RWE AG's plan to expand in Bulgaria's nuclear market is on the brink of collapse because financing for the project couldn't be obtained.

The previous cabinet started talks with the Russian government on a EUR 3,8 B state loan for the project and offered guarantees for it.

It hired 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 at the Danube river town, whose price tag 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.

The new government of the center-right GERB party says it is not willing to provide any state guarantees for loans and will make a thorough analysis and research of the project.

It is to decide by the end of September whether to scrap or push ahead the construction of the multi-billion Belene nuclear power plant.

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