Dispute continues over Belene's price tag

14 February 2011

Russian state nuclear enterprise Rosatom has put extra pressure on its Bulgarian partners for the completion of the commercial negotiations for the construction of two reactors at Belene.


How the Belene plant could look (Image: NEK)
Rosatom was selected by the Bulgarian National Electric Company (NEK) to co-finance two 1000 MWe VVER reactors at Belene, with a strategic partner and two minority stakeholders.


According to Russia's RIA Novosti news agency, an internal memo sent by Rosatom's deputy head of marketing and development Alexei Kalinin to agency chief Sergei Kiriyenko expressed concern that AtomStroyExport (ASE), the project's general contractor, and NEK had not yet signed a supplement to the general agreement to build the plant, which was signed in 2006.


This supplement is necessary for construction to go ahead. Rosatom will hold a 49% stake in the project, while NEK will have a share of 51%. However, NEK's stake will be reduced to 20% or less when a new strategic partner is found to replace former investor RWE. In addition, Finland's Fortum has agreed to take a 0.5% stake and the Serbian government has declared an interest in taking a stake of between 0.5% and 5%.


"The deal is by no means in jeopardy," an expert with the Bulgarian Nuclear Association told World Nuclear News. "It is simply the case that Rosatom and NEK cannot agree on the inflation index that needs to fill in the gap between the Russian €4.0 billion ($5.4 billion) offer and the Bulgarian government’s estimated price of €6.4 to €7.0 billion ($8.7 to $9.5 billion), which takes into consideration forward inflation."


The latest bilateral negotiations at the end of January aimed to extend the existing agreement between NEK and Rosatom, signed in 2009, so that construction of the plant could start by the end of 2011. Since coming to power in August 2009, Boyko Borissov's government has put Belene's economic profitability through tough assessments as the price tag of €4 billion for the two reactors had been determined in 2006.


Since October 2010, the Bulgarian government has completed the selection of HSBC as a financial advisor, while the Bulgarian parliament has voted through the country's new energy strategy, but still needs to pass an EU-wide law on energy liberalisation by next month.


In the absence of a second principal investor following RWE's departure and the change of government in 2009, NEK has consistently declined Rosatom's offers to fully finance Belene. The Bulgarian government's long-term strategy is for diversification of energy sources and stepping away from a further dependence on Russia's participation in the Bulgarian energy market.


The supplement that Russia had hoped to be signed at the end of January would have allowed for construction to start within three months and for the completion schedule to remain as 2015.


The other option is for all existing partners - including the potential investors who will hold up to 30% in the project - to form a company. However, this could take another six months to complete from the time when the agreement between all the parties has been signed. This means that an agreement on the inflation index needs to precede the formation of the Belene company.


However, Bulgarian finance minister Simeon Dyankov has repeatedly stated that Bulgaria cannot participate in this project as a key financial partner, a position which the government has maintained since 2009.


Other than agreeing on the inflation index, the technical specification of the project is 90% completed. Once the Bulgarian Nuclear Power Regulatory Agency approves the technical specifications, the only outstanding issue remains an agreement on the price.


If the project falls apart, which seems unlikely, ASE could take NEK to court and demand compensation for breaking the existing contract. It could also tell equipment suppliers Siemens and Areva that payment is being stopped and could then move the equipment that has been ordered for Belene to the Akkuyu site in Turkey, where ASE has also got ambitions to build a nuclear plant.


In any case, the Bulgarian energy minister Traicho Traikov has said that ASE will take part in building the pre-planned units 7 and 8 at the existing Kozloduy plant.


Rosatom's Kalinin's memo said that the Belene project is a competitive one that has "every chance of being built ahead of other possible plants in the macro-region" and does not involve "cash injections by the Bulgarian budget" to get construction underway.


By Rumyana Vakarelska

for World Nuclear News