Bulgaria Poured Major State Funds in Belene NPP Project, MP Probe Finds

Business » ENERGY | January 23, 2013, Wednesday // 15:06
Bulgaria: Bulgaria Poured Major State Funds in Belene NPP Project, MP Probe Finds GERB MP Dian Chervenkondev presented a financial probe report demonstrating that the Bulgarian state paid several hundred million BGN for the unrealized Belene NPP project. Photo by BGNES

The overwhelming share of Bulgaria's expenditures on the preparation and execution of the construction of the Belene NPP has come from the state budget, according to the findings of a temporary parliamentary committee probing the project.

The results of the committee's work were announced Wednesday by Dian Chervenkondev, a MP from the ruling center-right party GERB, the committee chair, who presented an Interim Report on the probe for verifying the Belene NPP project for the period from 2002 till March 2012 when the plant was abandoned by the government of PM Boyko Borisov over "economic unfeasibility".

Chervenkondev said the MP committee drafted the report with aid from Bulgaria's Agency for State Financial Inspection and its experts who "did a perfect job".

"The Belene NPP project enjoyed some serious political cover that did not allow proper control and supervision over its lawfulness. It was not carried out based on documents as we could find out from the large number of papers, files, folders, and cardboard boxes that we got from the state institutions," he explained.

"Let us see who's lying and what the facts and circumstances really are with respect to the price of the project, the supply treaties, and the finding of a strategic investor," Chervenkodnev said, as cited by BGNES, referring to some of the major issues in the project that was supposed to become the second Bulgarian nuclear power plant as negotiated by the three-way coalition government of Sergey Stanishev (2005-2009) and Russian state energy corporation Rosatom's subsidiary Atomstroyexport.

Chervenkondev did state that the Belene NPP project was apparently one "with many good intentions" such as securing low electricity prices, state revenues, employment, and development but one that "like many other projects of the three-way coalition" produced very different results.

The GERB MP reiterated claims of Prime Minister Boyko Borisov that the construction of the Belene plant would ruin Bulgaria financially.

He further said he believed the "ugly truth" from reports of consultant HSBC and alleged papers of German energy giant RWE, which quit the Belene project in 2009, that the price for the construction of the NPP would be over EUR 10 B, and that Bulgaria's National Electric Company NEK was supposed to pay its share of EUR 5.4 B to secure a 51% state stake in it.

"[Bulgaria's ex PM] Stanishev as one of the initiators of the upcoming referendum on nuclear energy keeps saying, "Not a single BGN has been paid from the state budget for the Belene NPP. Thus, he has lied on the 770 000 people who signed the petition for a referendum on nuclear energy. The government has paid BGN 300 M from the state budget for NPP equipment," Chervenkondev said, addressing Stanishev, "If you have any political dignity, you need to stand up and say, "We are sorry, we lied to you!"

He added that the Bulgarian state keeps paying off a credit to BNP Paribas, and that a total of EUR 109 M were paid for the clearing of the Belene NPP construction site.

In his words, nobody can really estimate what the actual price of the construction site services was supposed to be.

Stanishev, whose government of the so called three-way coalition (2005-2009) signed the contract for the construction of the Belene NPP back in 2006 for a price of EUR 4 B with Russian state corporation Rosatom and its subsidiary Atomstroyexport, stated Wednesday the original agreement provided for a price adjustment according to inflation.

Bulgaria and Russia have been haggling over the price in question for the past five years, among other issues surround the construction of what was supposed to become Bulgaria's second NPP, with an initial capacity of 2000 MW.

Rosatom has insisted on a price of EUR 6.3 B, while Bulgaria's Borisov Cabinet demanded EUR 5 B at first. Subsequently, however, Bulgarian Prime Minister Boyko Borisov announced that the cost of the Belene project could run up to EUR 10 B, and that the project is prohibitively costly and economically unfeasible for Bulgaria. Its abandonment in March 2012, led Russia's Rosatom to file a suit with an international arbitration court in Paris.

The Interim Report of the parliamentary committee probing the Belene NPP projects comes after on Monday the Bulgarian government revealed secret documents from the Economy Ministry demonstrating why German energy company RWE quit Bulgaria's nuclear project in 2009.

Borisov said German utility RWE abandoned plans to participate in the construction of a 2000MW nuclear plant in the Bulgarian Danube town of Belene after realizing that its price tag has towered to EUR 10 B.

The proposed price for the construction of two 1000 MW units of what was supposed to become Bulgaria's second nuclear power plant, Belene, was EUR 6.3 B, not EUR 10 B, as Bulgarian Prime Minister Boyko Borisov claims, Russian state company Rosatom stated on Tuesday.

According to Rosatom spokesperson Sergey Novikov, Bulgarian PM Boyko Borisov's statements that the planned price for the construction of the Belene nuclear plant was EUR 10 B are extremely perplexing.

On Monday, Borisov said German utility RWE abandoned plans to participate in the construction of a 2000MW nuclear plant in the Bulgarian Danube town of Belene after realizing that its price tag has towered to EUR 10 B.

This allegedly emerged from a letter by the major German company to Bulgaria's state energy holding company NEK, dated 2008, which Prime Minister Boyko Borisov made public on Monday.

The letter was discovered by accident by Economy and Energy Minister Delyan Dobrev, tucked in a box, holding strictly confidential information, where the previous government hoped it will remain unseen, Borisov said.

In the letter RWE draws attention to the fact that NEK still has not made clear how it ill finance its share of the project worth EUR 5 B. The German company voices strong protest against plans for signing the fifth agreement with Russia for the project and commits to contribute up to EUR 10 M in it in 2009.

The previous Socialist-led government chose in 2009 German power utility RWE to become a strategic partner in the Belene project with a stake of 49%.

The next year however the German utility abandoned plans to participate in the construction of a 2000MW nuclear plant in Belene "due to funding problems".

Speaking on Monday, Prime Minister Borisov slammed the previous government for hiring 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, whose price tag has 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.

BNP Paribas SA, France's largest bank by market value, ditched the project in February 2010.

The latest statements on the Belene NPP project come days before Bulgarians head for the voting polls to cast a ballot in the country's national referendum on development of atomic energy.

The voters will receive a white ballot with the question "Should atomic energy be developed in Bulgaria through the building of a new Atomic Plant?" There will be an option to choose "yes" or "no" by using a blue ink pen.

Under current legislation in order to have a valid referendum at least 4 345 500 people must cast a ballot which is equal to the voter turnout at the last general election. A positive answer to the question of the referendum requires 50% of the vote plus 1 ballot.

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Tags: Belene, RWE, Atomstroyexport, BSP, government, BNPP, Bulgarian Energy Holding, NEK, Belene NPP, Atomstroyexport, Rosatom, Russia, Sergey Novikov, Sergey Stanishev, BSP, Bulgarian Socialist Party, EC, European Commission, Prime Minister, Boyko Borisov, Dian Chervenkondev, GERB
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