Bulgaria will use budget funding to pay nearly EUR 629 M to Russian company Atomstroyexport, Energy Minister Temenuzhka Petkova has said.

The sum must be transferred in an urgent manner as interest is being accumulated every day, Petkova has told members of the Energy and Finance committees with the Bulgarian Parliament.

EU approval will have to be secured for the payment as it qualifies as "state aid", she has explained.

Bulgaria lost an arbitration lawsuit late in the spring and is to pay for the reactor and an equipment produced by Atomstroyexport for the Belene nuclear power plant (NPP) project which Prime Minister Boyko Borisov's previous government suspended in 2012.

In return, Bulgaria will receive the reactor and all the equipment. Borisov has been studying options to either sell it or use it to revive the construction of Bulgaria's second nuclear plant.

The figure announced by Petkova is the sum of the principal named in the arbitration's ruling and the interest rates piled up on it since the spring (when the ruling was made). Russia's claim was worth EUR 1.2 B, but only EUR 620 M of it was set as principal by the arbitration.  

"If the payment is not made now but by the end of the year, the amount of the principal plus interest will reach EUR 646.23 M," Petkova has warned, predicting gloomy consequences for the country's entire energy system. Under her initial proposal, a payment was to be made by the end of 2016.

Atomstroyexport may even try to push for the state-owned National Electricity Company (NEK) to be declared insolvent, she has added.

According to the list of decisions adopted by the regular ministerial meeting on Tuesday, the budget of Bulgaria's Energy Ministry will have to be given a boost. The ministry oversees NEK, the company having procured the equipment.

Petkova has also told ministers the arbitration has not yet commented on Sofia's claims that the interest rate set by its ruling may have been miscalculated.