Bulgarian MPs Examine Violations in Belene Nuclear Project

Bulgaria's temporary parliamentary subcommittee for the Belene NPP is examining Tuesday the report of the Public Financial Inspection Agency revealing violations in a number of procedures.

At the last subcommittee meeting, the Members of the Parliament decided to extend the deadline for their work to January 25th. Its report about likely violations in the preliminary procedures for the project to build a second Nuclear Power Plant in the Danube town of Belene is expected right in the eve of the referendum, scheduled for January 27th.

Former Heads of the National Electric Company (NEK), Mardik Papazyan and Luybomir Velkov, and the former CEO of the Bulgarian Energy Holding, BEH, Galina Tosheva, have been summoned to the Tuesday meeting along with appraisers, who have prepared a report for the sale of the equipment at the Belene site.

Those summoned for the last meeting of the subcommittee failed to appear before it.

Bulgaria's center-right Citizens for European Development of Bulgaria, GERB, government scrapped the Belene project in March 2012, declaring it economically unfeasible. The pro-Belene Bulgarian Socialist Party, BSP, then launched a petition for a referendum on the Russian-Bulgarian project. The referendum will take place on January 27, 2013.

Discussions renewed recently on the abandoned project, with Rosatom subsidiary Atomstroyexport upping its claim against Bulgaria's National Electricity Co. to EUR 1 B and a mysterious investment fund emerging with an offer to take over the project. Bulgaria's right-leaning Blue Coalition has challenged the legality of such a referendum.

Rosatom recently said it was open for an out-of-court settlement of the arbitration suit.

In the middle of July 2012, Russia's state nuclear company Atomstroyexport took Bulgaria's NEK to an arbitration court for EUR 58 M over delayed payments for its work on two nuclear reactors.

The next day the Bulgarian company said it is ready to strike back with a EUR 61 M counter claim against Atomstroyexport over delayed payments for purchases of old equipment for the plant, worth about EUR 300 M.

Three months later, on September 11, Rosatom Corp., Russia's state-run nuclear company, increased a claim against Bulgaria's National Electricity Co. from EUR 58 M to EUR 1 B.

Atomstroyexport, a unit of Rosatom, said it increased its claim filed with the International Court of Arbitration in Paris in 2011 to cover construction work and production costs of the two canceled nuclear reactors.

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.

NEK initially held a 51% stake in the scheme and Borisov's government planned to cut its shares in the project to 20-30%, which will still allow the country to keep its blocking quota.