Bulgaria’s NEK settles arbitration damages for shelved Belene nuclear plant

Written by on December 9, 2016 in Bulgaria - Comments Off on Bulgaria’s NEK settles arbitration damages for shelved Belene nuclear plant

Bulgaria’s state-owned electric utility NEK has paid 601.6 million euro in damages to Atomstroyexport, the foreign contracts subsidiary of Russia’s state nuclear corporation Rosatom, Energy Minister Temenouzhka Petkova said on December 9 during question time in Parliament.

The money was transferred into Atomstroyexport’s accounts on December 8, Petkova said.

In a statement, Atomstroyexport confirmed receipt of the funds and was satisfied with the fact that NEK disbursed its commitments in full under the terms of an agreement signed in October, which saw the Russian company drop the daily penalty interest as long as NEK paid the principal owed by December 15.

The accumulated amount of daily penalties would have reached 23.8 million euro by that date. NEK’s agreement with Atomstroyexport also saw the Russian company accept a 20.9 million euro deduction in the original amount of damages ordered by arbitration, following several objections raised by the Bulgarian side to the calculation methodology.

Atomstroyexport was picked to build two 1000MW nuclear reactors at Belene on the Danube River, a project that was shut down by Bulgaria in 2012. The Russian contractor filed for arbitration, asking for 1.2 billion euro in damages for equipment ordered for the nuclear power plant, which NEK never paid for, and won the court action in June, although it was awarded just over half of the amount it claimed.

NEK decided not to appeal the ruling in September after Parliament passed a bill on September 28 that authorised a cash injection from the state Budget to NEK to pay the damages awarded by the tribunal.

The delay in the disbursement was due to the fact that Bulgaria was waiting for the European Commission to rule on whether such a transfer was allowed under the EU’s state aid rules. The Commission gave its approval earlier this week, according to reports in Bulgarian media.

NEK will now take ownership of the equipment manufactured by Atomstroyexport, but uncertainty remains about what the company will do next. Bulgarian officials travelled to Iran earlier this year to discuss a possible sale of the equipment, but there has been no development in the months since then.

Speaking to reporters in Parliament on December 9, Petkova said the Belene assets – the site itself and the equipment from Atomstroyexport – could be spun off into a separate company that would be put up for privatisation.

“If there is [investor] interest, then the [Belene nuclear power plant] project could be carried out on a market basis. If there is no investor interest, we will go in another direction and seek other options,” she said, as quoted by Bulgarian National Radio.

Earlier this week, the government’s media office said that several Cabinet officials, including Prime Minister Boiko Borissov and Petkova, met with representatives of state-owned China National Nuclear Corporation. The statement said that the meeting was requested by the Chinese company’s representatives, who were told that any future Belene project would have to be carried out without government financial guarantees or a long-term electricity purchase contract.

According to the statement, the Chinese representatives, whose names were not given, said that the company was prepared to participate in the project under such conditions.

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

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