Russia Grants Bulgaria Belene NPP Loan without State Guarantee

Business » ENERGY | February 19, 2010, Friday // 14:08
Bulgaria: Russia Grants Bulgaria Belene NPP Loan without State Guarantee Bulgaria's Economy and Energy Minister Traikov (left) together with the Russian Energy Minister Shmatko in Sofia, Friday, Feb. 19, 2010. Photo by BGNES

Russia is going to grant Bulgaria a loan for the construction of the Belene Nuclear Power Plant, Energy Minister Traikov announced after meeting his Russian counterpart Shmatko.

Bulgaria’s Minister of Economy, Energy, and Tourism, Traicho Traikov, met with Russian Energy Minister Sergei Shmatko and the CEO of the Russian state company Rosatom in Sofia over the Bulgarian request for a EUR 2 B loan from Rosatom for the construction of the Belene NPP.

Traikov announced after the meeting that the Russian loan will be granted to Bulgaria without any corporate or state guarantees. The aim of the loan is to proceed with the construction phase of the project even though a strategic foreign investor has not been selected yet as the German company RWE withdrew in the fall of 2009.

RWE was supposed to provide some EUR 2 B in funding in exchange for a 49% share, whereas Bulgaria’s National Electric Company NEK kept a 51% share.

We are absolutely sure in the profitability of the Belene Nuclear Plant project, and we confirm our certainty by investing our funds in it,” the CEO of Rosatom, Sergei Kiriyenko declared after the meeting.

“I can confirm that the Belene project is economically feasible. That is why, the major issue before us is how to make the construction of the nuclear plant happen as quickly as possible. Today’s meeting has confirmed that we have the same understanding for the development of the project and the solving of the existing problems,” Kiriyenko said.

He praised the Bulgarian government for selecting the same day to announce the tender for selecting a financial consultant to help it pick a strategic investor in the Belene NPP.

“We are certain that this is the right way to go, the problem is that this way takes about 1,5-2 years. We believe that the construction site at Belene must not be abandoned in the meantime. First, because the equipment has already been produced. Second, because the construction site would have to be conserved and then reopened again in two years,” the Rosatom CEO stated.

According to Kiriyenko, the Russian company constructing Belene, Atomstroyexport, will be assigning up to 40% of its tasks to Bulgarian subcontractors, which will be important for the Bulgarian economy. “It is not of minor importance that today the Belene NPP is the only nuclear power plant under construction in this part of Europe,” he stressed.

“That is why, we are ready to get involved and to provide the funding needed for the period when the Bulgarian government will be seeking a strategic investor. We are ready to provide the necessary funds within a very short time. And we really do not need, as Minister Traikov correctly stated, the guarantee of the Bulgarian government. We are totally convinced of the competitiveness and profitability of the Belene Project,” said the Rosatom CEO only hours after Bulgaria’s Finance Minister Simeon Djankov made it clear the government would not provide state guarantees for any loan the Russian might grant for Belene.

Kiriyenko emphasized that the Russian state company was ready to provide the money for construction “on a temporary basis”, with the understanding that whenever the Bulgarian government selects a strategic investor, it is going to pay back the money the Russians would have invested.

The CEO of Rosatom also expressed the readiness of the Russian government to become a shareholder of the future Belene Nuclear Power Plant.

“To the extent that the Bulgarian government deems appropriate, we are ready to become shareholders of Belene, if that is necessary,” Kiriyenko said.

He made it clear that during their meeting, the two Ministers Traikov and Shmatko had discussed the financial and legal instruments through which the Russian loan could be granted.

They have agreed to complete the technical issues by the end of March 2010, and to continue with the “practical activities” immediately after that.

"I would like to emphasize that Russia and Bulgaria are consistently realizing their ideology of pragmatic cooperation between our countries in the energy field. This is the ideology that we created six months ago, and I am very glad that we have started to realize all agreements we made during the sessions of the bilateral commission at the end of last year,” Russian Energy Minister Sergei Shmatko said.

In his words, the experts of both Bulgaria and Russia executed a lot of work over the last six months in order to be able to forge a uniform approach allowing both the Bulgarian government as the contracting authority, and the Russian side as the contractor to figure out what exactly is needed to complete successfully the construction of the Belene NPP.

After the RWE company pulled out and the estimated cost of the Belene plant rose from EUR 4 B to EUR 10-12 B, the Bulgarian government has started considering reducing its stake in the future plant from 51% to as little as 20%. In addition to a strategic investor to be selected, the Russian government might also become a shareholder of Belene.

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Tags: Belene, Belene NPP, Nuclear Power Plant, Rosatom, Russia, Sergei Shmatko, Traicho Traikov

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