Belene: an unfinished play of indeterminate length

Written by on September 28, 2012 in Bulgaria, Business, News, Perspectives - No comments

Bulgaria’s autumn political drama season got off to a relatively quiet start, a calm before the storm of debates stirred each year by Budget draft proposals. But for the past two days, Sofia’s political establishment has been in an uproar over the future of the frozen Belene nuclear plant project and the identity of the consortium offering to build the plant as a private venture.

Bulgaria has avoided the worst of the global economic downturn, but has hardly escaped it unscathed – foreign investment, one of the key factors that fuelled the boom of the previous decade, has declined dramatically in recent years, although the most recent signs seem to be pointing toward an improvement this year.

Failure to find private investors for the project (as well as rising costs) have been cited as the main reasons why Bulgaria’s Cabinet decided in March to indefinitely shelve the plans to build two 1000MW reactors at Belene.

Rather than chasing chimeras, Bulgaria has been preparing amendments to the Investment Promotion Act meant to adapt the law to the new economic reality. But instead of discussing the draft of the bill before it goes to the floor, as they were scheduled to do on September 26, MPs from Parliament’s economic policy were presented with the representative of a consortium interested in resurrecting Belene – the chimera found its own way to Bulgaria’s door.

Dramatis personae
The alleged investors behind Global Power Consortium may not have found their way to Belene unassisted, judging by the identity of their two Bulgarian consultants.

One is Bogomil Manchev, head of a private nuclear power association and owner of Risk Engineering, one of the firms paid millions of euro for consultancy services on the Belene project. Manchev has also been one of the most ardent supporters for restarting Belene after the project was shelved, hinting over the summer that the project had a future in the private sector.

The other is financier Emil Hursev, a controversial figure by most accounts – a former bank executive, he stood trial on accusations of siphoning funds from Mineralbank, one of many Bulgarian lenders who floundered during the banking crisis in the mid-1990s, but was acquitted of the charges in court.

Global Power Consortium itself was represented by one Sam Reddy, whose LinkedIn profile lists him as the chief executive of Swiss company FreNuc SA, which claims to offer nuclear engineering services “backed by decades of industry experience and detailed understanding of QA requirements”.

The identity of the investors behind Global Power Consortium was not disclosed. According to Hursev, these are publicly-traded companies who wish to remain behind the scene until the details of the prospective investment were clarified in negotiations with the Bulgarian Government. Manchev identified New York-based investment fund Quantum Group was to be one of the main investors.

(Quantum Group claims to be “a diversified company with interests in several growth industries, which have expanded globally over the last two decades”, including IT, telecommunications, mining, real estate and the energy sector. The website globalpowerconsortium.com is a carbon copy of Quantum Group’s own page, quantumgroupus.com).

According to Bulgarian website bivol.bg (no relation) – either praised as a paragon of investigative citizen journalism or lambasted as a hive of conspiracy theorists, depending whom one asks – posted details of Global Power Consortium’s registration in the state of Delaware, which showed that it was incorporated as a limited liability company on May 30 2012.

Act I
Economy Minister Delyan Dobrev’s introduction of Reddy to the MPs on the economic policy committee was, by his own admission, his first meeting with the prospective investor. He said that he had avoided any prior meetings so as not to breach the Cabinet’s decision to freeze work on Belene.

Reddy told MPs that the consortium had no plans to change the technology – Russia’s Atomstroyexport has been contracted to build the reactors (the company is now suing Bulgaria for one billion euro, claiming the figure was the cost of equipment ordered for Belene).

Should Bulgaria agree to unfreeze Belene, the consortium was prepared to acquire the project’s assets and liabilities, including the court litigation with Atomstroyexport, without asking for any Government guarantees, Reddy said.

Reddy said that the Global Power Consortium was in touch with several prospective investors, whose names would be announced when negotiations are concluded.

Opposition MPs were left unimpressed by the presentation, saying that Parliament was the wrong place to hold the first discussion on the issue. Socialist MP and former economy minister Roumen Ovcharov accused the Government of attempting to stage a farce, saying that the interest proved that Belene was a viable economic project.

(The socialists have made restarting Belene one of the focal points in their electoral campaign ahead of next year’s parliament elections, gathering hundreds of thousands of signatures in favour of a referendum on the future of the project. Part of their opposition to Global Power Consortium may be just irritation at having one of their signature campaign issues neutralised.)

Finance Minister Simeon Dyankov’s reaction was to re-iterate that he would never approve state guarantees for Belene and that the prospective investors should “back their words with money.”

Act II
Despite the opposition’s efforts, Parliament was set to swiftly give the Cabinet a mandate to begin the negotiations. But instead of voting the motion on September 27, as initially envisioned, the vote was postponed for next week, ostensibly to give MPs more time to become familiar with the investors’ proposal, but also to give Bulgarian authorities more time to carry out a belated background check.

Prime Minister Boiko Borissov acknowledged as much, saying that he asked all intelligence services to inquire with their counterparts in the US and other countries about the identity of the prospective investors, as quoted by Bulgarian National Television.

He also listed a number of conditions that the consortium would have to meet in order to be considered a viable buyer. These included proving it was “a serious investor”, not asking for government guarantees or a long-term electricity sale contract, as well as covering the Bulgarian state’s spending on the project so far, estimated to exceed one billion leva. The consortium should also put down a deposit of 200 million euro as proof of their intentions – if negotiations break down, the money would stay with the NEK, the state power utility that owns the Belene project.

Centre-right opposition party Democrats for Strong Bulgaria asked the Cabinet to seek an official statement from the US department of energy about “the so-called investor.” Party leader Ivan Kostov said he found the consortium dubious, but the burden of proof was on the Cabinet. Either way, Parliament should not unfreeze the project because that would make the country look unpredictable to investors.

The socialists, deciding that they would not back the ruling party’s motion on negotiations with Global Power Consortium, instead filed their own motion proposing the unfreezing of Belene and “mandating the Cabinet to ensure the project is realised, while national interests are protected through state participation.”

Dobrev, speaking on the breakfast TV show of private station bTV, said that the lack of clarity over the identity of the prospective investors was understandable, given that such investors tended to band together for a specific project. He said that these would be carefully checked and, should they prove convincingly trustworthy, the Cabinet was interested in starting negotiations on the topic of Belene.

A twist came from Citizens for Bulgaria, the new party headed by former European commissioner Meglena Kouneva (which is set to win enough votes to potentially play kingmaker in the next Parliament, opinion polls have claimed). Kouneva said on September 27 that Borissov was aware of the investor even as his Cabinet decided to shutter the project, but the rest of her critical remarks closely echoed those of the socialists about the “inappropriate nature” of the investors’ presentation and the need to maintain a state stake in the plant.

Contractor Atomstroyexport too piped in, saying that investor interest disproved Sofia’s stance that the project was economically unviable. Atomstroyexport denied having held any talks with prospective investors – and neither has its parent company Rosatom, according to a separate statement from a spokesperson for Rosatom, as quoted by Bulgarian National Radio.

Act III
With all sides issuing their opening salvos, new developments should be expected next week, when Parliament is to consider the two competing motions on Belene.

Although the topic could surface during Question Time in Parliament on September 28, neither Economy Minister Dobrev nor Prime Minister Borissov were scheduled to appear in Parliament – not that such trifling details have stopped opposition or ruling party MPs from political posturing in the past.

With so much uncertainty surrounding Global Power Consortium, there has been no talk of a timeline for negotiations or any deadline for reaching a decision has been mentioned just yet.

Without a shadow of a doubt, however, this is far from the last word on Belene – with so many vested interests clashing on the issue, it figures to provide plenty of opportunities for more political drama to unfold in the years to come.

(Belene nuclear plant site, screengrab from Bulgarian National Television)

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About the Author

Alex Bivol is the news editor of The Sofia Globe.