US Consortium Wants 'to Build' Bulgaria's Abandoned Belene NPP

Business » ENERGY | September 26, 2012, Wednesday // 15:21| Views: | Comments: 0
Bulgaria: US Consortium Wants 'to Build' Bulgaria's Abandoned Belene NPP The abandoned construction site of what was to be a 2000 MW NPP near the Danube town of Belene. Photo by BGNES

A largely unknown US enterprise called "Global Power Consortium" has expressed interest in actually building Bulgaria's Belene NPP, the project for a second Bulgarian nuclear plant that was abandoned by the Borisov Cabinet in March 2012.

Global Power Consortium's interest in the construction of the 2000 MW Belene was made public in Sofia on Wednesday by a representative of the entity, Samuel Reddy, who said he had presented an offer to Bulgarian Minister of Economy, Energy, and Tourism Delyan Dobrev.

"We are interested in the Belene NPP project. We are presently in contact with NEK (Bulgaria's National Electric Company – editor's note). We are in touch with several companies that are yet to join in the consortium. We are now developing a memorandum for consortium membership," Reddy stated in Sofia, as cited by BGNES.

The contract for the construction of the 2000-MW Belene NPP was signed in 2006 with Russian state company Atomstroyexport, a subsidiary of Rosatom, by the coalition Cabinet of PM Sergey Stanishev.

However, the construction made little congress because of constant price haggling between Bulgaria and Russia, and in 2009 German company RWE, which was supposed to provide EUR 2 B for the project as a strategic investor, pulled out.

The Borisov Cabinet, which took over in 2009, technically continued the search for strategic investors but in March 2012 it announced it was ending the Belene NPP, labeling it "economically unfeasible".

According to Samuel Reddy, the alleged Global Power Consortium is currently negotiating with Russian state company Atomstroyexport, which was supposed to build the NPP in Belene.

He added that Bulgaria's NEK should first create a project company to assume the assets and liabilities of the Belene project.

"We aren't seeking the financial guarantees of the Bulgarian government for this project. It will be 100% guaranteed with the funding of the US companies involved," the GPC representative promised.

He added the consortium will seek to acquire the Belene NPP assets at market prices.

Bulgaria's government is currently tangled up in a EUR 1 B dispute with Russia over the termination of the Belene project. It is unclear how the GPC offer to "build" the NPP will affect the dispute.

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.

Atomstroyexport was contracted in 2005 to build the plant for an initial 4 billion euros, but the costs later rose.

After failing to agree on its cost and find Western investors however in March 2012 Bulgaria decided to abandon plans to build its second nuclear power plant.

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Tags: Samuel Reddy, Global Power Consortium, GPC, Belene NPP, NPP, Nuclear Power Plant, Rosatom, Atomstroyexport, Russia, Delyan Dobrev, Economy Minister
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