Bulgarian Parliament gives Cabinet mandate to seek Belene nuclear plant investor

Written by on June 7, 2018 in Bulgaria - Comments Off on Bulgarian Parliament gives Cabinet mandate to seek Belene nuclear plant investor

Bulgaria’s Parliament approved a motion on June 7 to give the government a mandate to hold talks with potential investors in the shelved Belene nuclear power plant, but stopped short of unfreezing the project altogether.

The motion, tabled by the ruling coalition, would allow the Cabinet to overturn its earlier decision, dating back to 2012, that halted all work on the project, as well as spin off all Belene assets and liabilities, currently held by state-owned electric utility NEK, into a separate entity.

The Cabinet was also given a deadline until October 21 2018 to prepare an international tender for a strategic investor in the project. The MPs backed the cabinet’s view that any future investor in Belene would have to agree that the plant is built without any state guarantees to finance the project or long-term electricity purchase contracts.

The “market principle” appears to be the key consideration for the future of the project, given that, at the time it was shelved, the costs of construction were estimated to exceed 10 billion euro, according to a study commissioned by the government and carried out by HSBC.

MPs passed with the motion with 172 in favour, 14 opposed and two abstentions. A separate motion, tabled by the opposition socialists, which would have overturned the 2012 Parliament decision to freeze the project, was rejected by MPs.

A long-standing supporter of the Belene nuclear power plant, the Bulgarian Socialist Party (BSP) argued that lifting the moratorium would allow the cabinet to begin talks with potential investors right away, but it failed to sway the ruling majority.

Energy Minister Temenouzhka Petkova, speaking to reporters in Parliament after the debate on the two motions, said that the decision would give the government more latitude in discussing the project with prospective investors. The nuclear power plant could be built in seven years, she said, as quoted by Bulgarian National Radio.

She said that four companies have shown interest in restarting the Belene project, but declined to give further details saying that the government was not authorised to disclose this information.

Reports in Bulgarian media in recent months, however, have identified Russia’s nuclear corporation Rosatom and China National Nuclear Corporation (CNNC) as two interested parties.

Rosatom is the parent company of Atomstroyexport, contracted to build the two 1000MW reactors for the Belene plant. Over the years, the corporation’s representatives have repeatedly said that Rosatom was prepared to discuss the future of the Belene project, including financing aspects, should Bulgaria decide to unfreeze the project.

Atomstroyexport won an international arbitration case against Bulgaria in 2016, asking to be paid for the equipment manufactured for Belene, and was awarded about 630 million euro in damages, which Bulgaria paid and, in exchange, took ownership of the two reactors.

But Sofia has been unable to find a buyer for the equipment since then – Iran, identified as the only realistic buyer, showed no interest – which prompted the Bulgarian government to reconsider its stance on Belene and ask Parliament for a mandate to discuss the project’s restart with potential investors. Unfreezing Belene would allow to “recoup” the 3.5 billion leva (about 1.8 billion euro) in project costs accumulated under several Bulgarian governments, cabinet officials have said.

A deal involving Rosatom could be welcome news to Bulgarian companies that could act as subcontractors on the project. That might not be the case with CNNC, which, according to earlier reports in Bulgaria, was interested in Belene as an opportunity to gain a foothold in the European Union, but had little interest in using the Russian technology.

The identity of the other two interested parties was unclear – France’s Framatome (spun off as part of the bankruptcy proceedings for Areva, which was a subcontractor on Belene before the project was shelved) was only interested in supplying equipment, according to a company representative, as quoted by news website Mediapool.

The same Mediapool report cited unnamed industry sources saying that the fourth interested party was General Electric, but the US conglomerate was similarly interested only in a sub-contractor role and did not want to become an investor.

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

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