Rosatom Denies Holding Price Talks with Bulgaria over Belene NPP

Rosatom Denies Holding Price Talks with Bulgaria over Belene NPP

Energy | March 13, 2011, Sunday

Russian state nuclear corporation Rosatom has refuted a Bulgarian minister's statements that it is currently negotiating with Bulgaria over the price for the construction of the second Bulgarian nuclear power plant in Belene.

"We would like to clarify that at present there are no official talks with Rosatom for the price of the Belene NPP project," Rosatom declared in a statement to the Bulgarian media on Sunday, March 13, 2011.

In the same statement, Rosatom slammed Bulgaria's Economy, Energy, and Tourism Minister Traicho Traikov hinting that he is incompetent as he said that the future Russian reactors in Belene will be of the 2+ instead of the 3+ generation.

"There is a chance that Bulgaria's second nuclear power plant in Belene will be built but we firth have to negotiate a price. If there is no solution in the talks with Rosatom, we need to think about how to utilize the EUR 100 M we already paid them out of a total of EUR 600 M we owe them for the two reactors for Belene," Traikov declared on Darik Radio. Another EUR 200 M that Bulgaria owes Rosatom for the first 1000-MW Belene reactor are due to be paid.

Traikov has thus restated the official position of the Bulgarian government that it is continuing to haggle with the Russians for the price of Belene – which, according to Rosatom, is untrue.

Traikov also mentioned for the second time his idea that if Bulgaria fails to strike a final deal with Russia for the Belene NPP, it can "reshuffle" its nuclear plants and use the first reactor that it was supposed to get from Russia for the Belene plant to install it as a seventh reactor in the existing Kozloduy nuclear power plant.

Last week for the first time Bulgaria's Economy Minister made public his idea that Bulgaria could use the equipment already ordered for its intended second nuclear power plant in Belene in order to build a new, seventh reactor in its only operational NPP  in Kozloduy.

"It is worth considering an option in which the equipment already produced for the Belene NPP will be installed in the Kozloduy NPP. Thus, instead of building two reactors in Belene, we can first construct a new nuclear reactor in Kozloduy," Traikov said in Sofia last Monday pointing out that thus the Kozloduy NPP will become "fully Russian" – i.e. with Russian technology, while Bulgaria can then "seek another solution" for the Belene NPP.

Traikov refused to provide more details about his curious nuclear reshuffle idea, and did not specify whether it has already been discussed with the Russian side. In its Sunday's statement, Rosatom has made no mention of Traikov's nuclear reshuffle idea and whether it has even been notified about it.

Traikov's statement comes to suggest that Bulgaria has difficulties reaching a final agreement with Russia on the construction of its second NPP in Belene.

The Bulgarian government continues to be haggling with the Russian company Atomstroyexport, a subsidiary of Rosatom, over the price for the construction of two 1000-MW reactors in the future second plant in Belene, and to be struggling to find strategic foreign investors. Traikov himself has indicated several times that Bulgaria could decide to build one or two more reactors in Kozloduy regardless of the fate of the questionable Belene project.

Atomstroyexport was selected with a tender in 2008 to build two 1000-MW nuclear reactors at Belene, a troubled project first started in the late 1980s.

The equipment for Bulgaria's intended second nuclear power plant has already been ordered to Rosatom, and the first of the two reactors is expected to be ready at the end of the spring. The construction site in the Danube town of Belene has been conserved over the talks going on in the past months over the price.

It is still unclear if the idea to shift nuclear equipment from Belene to the existing plant in Kozloduy stands any chance of realization, if it has clear-cut benefits for Bulgaria, and if the Russians will agree on it.

Should it be realized, however, it may pave the way for attracting other potential foreign investors to Belene. An example in hand could be a potential interest on part of China. In talks with Bulgarian Prime Minister Boyko Borisov in New York City in September 2010, Chinese Prime Minister Wen Jiabao declared that China wanted to invest in Bulgaria's second nuclear power plant in Belene but only if the plant were to use a Chinese nuclear technology. Back then the Bulgarian government reacted by thanking for the offer but saying that its predecessors had already signed a deal with the Russians.

In November, shortly after a visit to Sofia by Russian PM Putin, Bulgaria's National Electric Company NEK and Russian state company Rosatom signed a memorandum providing for a final fixed price for the two reactors of EUR 6.298 B.

This sum is still not final since the document is not binding; a final binding agreement for the establishing of a joint company for Belene was expected to emerge in 4-5 months, according to Rosatom head Sergey Kirienko, who was in Sofia to sign the document. Five months later Kirienko's prediction about a final agreement has failed to materialize.

The other non-binding documents on Belene signed at the same time provided for participation in the project of Finnish company Fortum with a share of 1%, and of French company Altran Technologies with a share of 1%-25%. NEK is to keep a majority share of 51%, while Rosatom is also expected to have a share of 25%.

Serbia has expressed interest in acquiring a share of 5%-10% but the talks for that have not been finalized yet. It is unclear what share Areva might go for if it ultimately decides to seek participation in Belene.

After it was first started in the 1980s, the construction of Bulgaria's second nuclear power plant at Belene on the Danube was stopped in the early 1990s over lack of money and environmental protests.

After selecting the Russian company Atomstroyexport, a subsidiary of Rosatom, to build a two 1000-MW reactors at Belene and signing a deal for the construction, allegedly for the price of EUR 3.997 B, with the Russians during Putin's visit to Sofia in January 2008, in September 2008, former Prime Minister Stanishev gave a formal restart of the building of Belene. At the end of 2008, German energy giant RWE was selected as a strategic foreign investor for the plant.

The Belene NPP was de facto frozen in the fall of 2009 when the previously selected strategic investor, the German company RWE, which was supposed to provide EUR 2 B in exchange for a 49% stake, pulled out.

Subsequently, in the last months of the Stanishev government in early 2009, Putin offered Bulgaria a Russian state loan of EUR 4 B, which ex PM Stanishev refused.

In late 2009, after the Borisov government took over, Rosatom offered Bulgaria a loan of EUR 2 B so that the construction can continue, in exchange for a stake in the future plant that the Bulgarian government could then buy out by returning the money. The offer was refused by the Borisov Cabinet which also made it clear it would construct the Belene plant only if an European (apparently meaning EU or Western European) strategic investor can be found.

Under Bulgaria's preliminary contract with Atomstroyexport signed in 2008, the construction of the Belene plant with two 1000-MW VVER nuclear reactors is supposed to cost EUR 3.997 B.

As the contract expired on September 30, 2010, Bulgaria and Russia decided to extend it by 6 months until they reach a final agreement on how much the construction of the Belene NPP will cost.

In mid November, the Bulgarian Energy Holding, NEK's parent company, picked HSBC, one of UK's biggest banks, for a consultant to help it decide how to proceed and attract new investors for the planned Belene nuclear power plant.

During his visit to Sofia in November, Sergey Kiriyenko, CEO of Russian state nuclear energy company Rosatom admitted that Bulgaria and Russia had made a mistake by not specifying the exact raise of cost for the construction of the Belene nuclear power plant.