Bulgaria’s state electric utility NEK lost an arbitration lawsuit against Russia’s Atomstroyexport, the company picked to build two 1000MW nuclear reactors at Belene on the Danube River, a project that was shut down by Bulgaria in 2012.
The exact amount of damages awarded by the International Court of Arbitration was not immediately clear, with Bulgaria’s Energy Minister Temenouzhka Petkova saying that Bulgaria would have to pay 550 million euro, while Russia’s nuclear corporation Rosatom, the parent company of Atomstroyexport, claimed it was awarded 620 million euro. The damages are owed for equipment ordered for the Belene nuclear power plant, which NEK never paid for.
Both sides appeared happy with the result – Rosatom said that the court’s ruling confirmed that the company acted in good faith, carrying out its contractual obligations, while Bulgaria’s energy minister praised the fact that the damages awarded were much lower than the 1.2 billion euro demanded by Atomstroyexport.
NEK will pay the damages and receive, in exchange, the nuclear equipment ordered. Petkova said that NEK officials would meet with Atomstroyexport representatives to discuss the prospects of a mutually-beneficial settlement.
Bulgarian Prime Minister Boiko Borissov too said that he was happy with the outcome. He said that Bulgaria would hold consultations with the European Commission, but the choice was between building a nuclear reactor using Atomstroyexport’s equipment or selling the equipment to a third party.
The Belene nuclear power plant was one of three major energy projects between Russia and Bulgaria, signed in January 2009 during a visit to Sofia by Russian president Vladimir Putin, none of which have been built: Bulgaria has renounced the intergovernmental agreement on the Bourgas-Alexandroupolis oil pipeline in 2013, after two years of attempts to persuade Russia and Greece to dissolve it by mutual consent, and the South Stream gas pipeline was cancelled by Putin himself in December 2014, with the Russian president blaming Bulgaria and the European Commission for its failure.
The Belene plant was shelved by the first Borissov administration in March 2012. From the start, the project was criticised for the narrow scope of the public tender, held in 2005, which focused on Russian-made light-water reactors.
Additionally, despite the initial announcement that the nuclear power plant would cost four billion euro to build, a final contract was never signed because of disagreements between NEK and Atomstroyexport on the cost escalator clauses.
A study by HSBC, hired by the Bulgarian Cabinet to carry out the financial audit of the project and estimate its costs, put the final price tag for building Belene at more than 10 billion euro, an increase owed largely to increased costs of financing in the wake of the global financial crisis. Bulgaria shelved the project shortly thereafter.
(Belene nuclear plant site, screengrab from Bulgarian National Television)