Bulgarian Parliament approves cash injection to settle Belene arbitration damages
Bulgaria’s Parliament passed at second reading on September 28 a bill authorising a cash injection from the state Budget to the state-owned electric utility NEK to pay the damages awarded by an international arbitration tribunal in a dispute with Russia’s Atomstroyexport.
Atomstroyexport, a division of Russia’s nuclear corporation Rosatom, 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.
The arbitration ruling has sparked a debate within Bulgaria about the future of the project, which was shelved during the previous administration of Prime Minister Boiko Borissov. The largest opposition party, the socialists, which have steadfastly backed the prospect of a nuclear power plant at Belene since the project was resurrected in 2005, have demanded restarting the project.
But Borissov’s GERB, the majority partner in the ruling coalition, has rejected that scenario. Borissov discussed the possible sale of the nuclear equipment during a trip to Iran in July, but in recent weeks, the most likely scenario to emerge is that NEK would spin off the Belene site and the nuclear reactors into a separate company that would then be privatised, so that the project can go ahead without any financial outlay from the government.
GERB MP Menda Stoyanova, head of Parliament’s budget committee, told the House that the bill would not impact this year’s Budget. “This will not increase the deficit. The money will come from the fiscal reserve, which currently stands at 14 billion leva. As for future impact on the Budget, I cannot comment. It would depend on whether the state decides to participate in a future project at Belene,” she said, as quoted by Bulgarian National Radio.
The bill stipulates that the money will be made available only upon approval from the European Commission, which needs to rule on whether the cash injection is allowed under the EU’s state aid rules.
Any delay could prove significant, given the daily penalty of about 167 000 euro imposed by the arbitration panel. According to Energy Minister Temenouzhka Petkova, speaking after the Cabinet meeting on September 20, when the government approved the bill before sending it to the House floor, NEK’s bill for the reactors would reach 646 million euro if unpaid by the end of the year.
(Belene nuclear plant site, screengrab from Bulgarian National Television)