Putin Makes Final Price Offer to Bulgaria for Belene Nuclear Plant

Business » ENERGY | November 13, 2010, Saturday // 18:33| Views: | Comments: 0
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Bulgaria: Putin Makes Final Price Offer to Bulgaria for Belene Nuclear Plant Russian PM Putin and Bulgarian PM Borisov are optimistic about the Belene Nuclear Plant. Photo by BGNES

 Bulgaria and Russia are making progress on the talks for the price of the construction of the Belene Nuclear Power Plant, their Prime Ministers, Borisov and Putin, clearly optimistic about the project, said in Sofia Saturday.

"The Bulgarian side insisted that we name a final price for the construction of the Belene Nuclear Power Plant, and we are ready to do that right now. But I cannot reveal this price because we have to coordinate it with Bulgaria first. We have presented the final figures to the Bulgarian side, now Bulgaria has to do its calculations, and let us know," Vladimir Putin stated as his joint news conference with Bulgarian Prime Minister Boyko Borisov.

At the same time, Putin praised the advantages of the Russian nuclear energy sector.

"We are realizing a large-scale program for the development of nuclear energy. The USSR build 30 plants, and we plan to built 18 reactors. In China we are building 6 nuclear power plants, we are also going to build a plant in Turkey. Our major competitors are Japan and the USA. They cannot surpass the quality of our equipment, and their prices are higher. On top of that, we provide the highest quality of the services. We are attracting partners who are the absolute leaders in their fields," Putin declared.

While refusing to reveal the price that Russia's state nuclear energy corporation Rosatom and its subsidiary Atomstroyexport offered to Bulgaria for the Belene plant, Putin said he expected that Bulgaria and Russia will sign an agreement for equipment for the Belene NPP by the end of 2010.

"We understand the position of the Prime Minister of Bulgaria, who wants to make Belene an international project. We believe that leading European companies will be attracted to participate, and we will discuss all details that Bulgaria deems important," explained the Russian PM apparently referring to Borisov's recent offers to Serbia, Croatia and Macedonia to have shares in the future Belene NPP. Of those Croatia has refused to participate, Macedonia has not stated its position yet, and Serbia has made it clear it wants to take part with a share of probably 5%.

Mentioning "leading European companies", Putin apparently hinted about the statements of Borisov from some two weeks ago that a German company from Bavaria is interested in becoming the strategic foreign investor in the Belene NPP.

Bulgarian Prime Minister Boyko Borisov in turn declared that the deal signed with the Russians for the construction of the Belene NPP (during Putin's previous visit to Sofia in January 2008) did not actually provide for a price of EUR 4 B (EUR 3.997 B), as advertised by the former Stanishev Cabinet, because it stipulated that a number of other components and "escalation costs" such as inflation would be factored in.

"The price of EUR 4 B for the construction of Belene is not correct. That is why we requested that experts from both countries determine a final, set price, calculating the interest, so that we know that Belene will cost this many and this many billions. This is when we will announce the final prices. We agreed with Prime Minister Putin to have the experts continue their work on the Belene NPP in order to have the cheapest and the most reliable nuclear plant in Europe," Borisov explained.

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 was de facto frozen in 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.

Subsequently, in the last months of the Stanishev government in early 2009, Putin offered Bulgaria a Russian state loan of EUR 4 B, which ex PM Stanishev refused.

In late 2009, after the Borisov government took over, Rosatom offered Bulgaria a loan of EUR 2 B so that the construction can continue, in exchange for a stake in the future plant that the Bulgarian government could then buy out by returning the money. The offer was refused by the Borisov Cabinet which also made it clear it would construct the Belene plant only if an European (apparently meaning EU or Western European) strategic investor can be found.

The government has started a tender to select a consultant that is supposed to help it pick an investor; the project, which originally was supposed to be 51% owned by the Bulgarian state, is to be restructured based on the fact that the National Electric Company NEK has already spent BGN 1 B on Belene. Over the past months, the Borisov Cabinet made it clear it might agree on a 20-30% stake in the future plant.

The recent news about the Belene project included Serbia's interest to participate in its with a share of up to 5%, and the interest on part of the Chinese government, which, however, said that the use of Russian technology is an obstacle to the participation of Chinese investors.

Under Bulgaria's preliminary contract with Atomstroyexport signed in 2008, the construction of the Belene plant with two 1000-MW VVER nuclear reactors is supposed to cost EUR 3.997 B.

As the contract expired on September 30, 2010, Bulgaria and Russia decided to extend it by 6 months until they reach a final agreement on how much the construction of the Belene NPP will cost.

Borisov has made it clear he is demanding a fixed price from the Russians rather than a price to which then escalation costs could be added.

According to hints by Economy Minister Traikov in the recent months, the total price of the Belene NPP should not be more than EUR 7 B, while the Russians have demanded a price closer to EUR 8 B.

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Tags: Belene NPP, Nuclear Power Plant, Belene, Boyko Borisov, Vladimir Putin, Atomstroyexport, Rosatom
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