RWE pulls out of Belene

28 October 2009

After a long period of uncertainty German utility RWE has finally abandoned a potential 49% investment in two new nuclear reactors in Bulgaria.


The saga of RWE's involvement began with a call for strategic partners from the Bulgarian government in May 2007. The German utility was picked from the ten European utilities that submitted bids with the hope that two VVER-1000 pressurized water reactors would be able to begin operation as early as 2015.


AtomStroyExport of Russia had already been chosen to provide the new plant, in cooperation with Areva providing instrumentation and control systems. Bulgarian national utility NEK was to take the controlling 51% stake, but the company and government have been unable to keep to the terms of a pre-construction finance deal with BNP Paribas, leading to penalties, and RWE had been unable to find a junior partner to share its stake.


The Bulgarian government announced today: "RWE has waived the Belene project." Despite several top-level meetings and the "constructive attitude" of the new government, the "main aims" of the joint development agreement had not been achieved.


The withdrawal leaves a strange situation where private finance has turned its back on a large investment that has full government support. Furthermore, there is total support from Russia for its reactor exports, and leaders are happy to authorise loans to Bulgaria to make the project happen. Contracts for major components for the reactors were announced only yesterday, indicating very strong Russian confidence that Belene will still go ahead.


The project is vital to Bulgaria's national interests in order to reduce dependence on imported gas and restore lucrative electricity exports cut short by the early shutdown of four reactors at Kozloduy in order to join the European Union.


One positive factor is yesterday's proposal from the European Commission to extend financial support for the early shutdown and decommissioning of Kozloduy 1-4. Government officials have previously indicated that such additional funding - €300 million ($440 million) from 2010 to 2013 - could be put towards Belene.