Bulgaria seeks new financial model for Belene

06 April 2010

The Bulgarian government has decided to break down NEK, the National Electricity Company, the country's energy monopoly, which includes its new nuclear assets in Kozloduy and Belene.

 

Belene

How the Belene plant could look (Image: NEK)

The move is a significant step towards finalising the new financial model for Belene, together with closing the selection procedure for a new management consultant, which is due to be completed by June 2010.

 

The appointment of a new consultant from among the six applicants is likely to coincide with the expiry date of the expected second three-month extension of NEK's contract with AtomStroyExport (ASE), controlled by the Russian state monopoly Rosatom.

 

The company was commissioned by the previous Bulgarian government to construct the new Belene plant, but finalising an investment deal with Russia seems highly unlikely before the end of June.

 

"The agreement with AtomStroyExport, needs to be put to a legal and financial review before a decision for its extension is taken, while Russia's consistent offer for funding is insufficient and does not replace the need for an additional European investor," said the Bulgarian energy minister Traicho Trykov.

 

Although the Bulgarian government had not yet officially responded to Rosatom by the 1 April deadline on its offer to invest €1.9 billion ($2.5 billion) in Belene, it is highly likely that this will happen before the new consultant and the Bulgarian government identify an additional strategic investor to complete Bulgaria's and Russia's state funding.

  

The Bulgarian Energy Holding, BEH, which is managing the consultant's selection procedure, will require the consultant to optimize Belene's construction planning and implementation, and to update its economic and financial model, including the creation of a new shareholding and financial structure. According to BEH, the main part of the consultant's work will be considered fulfilled only after new investors successfully join the project.

 

BEH was created in 2008 through the merger of five state-owned companies, including the National Electric Company (NEK), the gas monopoly Bulgargaz, the Maritza Iztok Mines, the Maritza Iztok 2 Thermal Plant and the Kozloduy Nuclear Power Plant into a €4 billion ($5.3 billion) energy giant, but has recently scrutinised and scaled down its management board as the initial step to break down the conglomerate.

 

While the Russian funding is likely to continue supporting the project over the next two years, it is clear that the extra funding under a new structure will be detrimental to Belene's construction.

 

Earlier in the year, the Bulgarian government leaned towards a reduced state stake in Belene - down from the current 51% to 30% - but in the process of the latest investigation of the way the Bulgarian state investment in Belene has been spent by the previous government, it is likely that BEH will retain a higher share of up to 50% in order to be able to continue scrutinising expenditure.

 

The investigation has also found that €1 billion ($1.3 billion), which represents the Bulgarian investment in Belene so far, has not been included in the budget deficit.

 

Meanwhile, Simeon Dyankov, the Bulgarian finance minister, has said that there are signs that Bulgaria is starting to emerge from the global financial crisis, which could encourage existing and new investors.

 

During a recent Black Sea region energy security forum, the Energy Commissioner, Günther Öttinger, said that he favoured a European private investor for the completion of the Belene project and that the EU would lend its support to the Bulgaria to find one.

 

The question is, as Minister Traikov had repeatedly said, whether new investors' bids will sufficiently match existing interest in participating in the Belene project, but at least it seems the government has so far cleared the decks for a new strategic investor.

 

By Rumyana Vakarelska

for World Nuclear News

 

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