WESTERN BANKS CONTINUE TO WITHDRAW THEIR INTEREST FROM THE PROJECT
(December 15, 2006) 30 October 2006, the Bulgarian utility NEK announced that a consortium of Russian Atomstroyexport and French / German Areva NP (Areva and Siemens) has won the tender for building the Belene Nuclear Power Station in the north of the country.
(650.5773) WISE Czech Republic - On a press conference a day later, NEK in the presence of Bulgarian Energy and Economy Minister Ovcharov gave further details. Atomstroyexport / Areva NP are to build a completely new AES-92 power station, using two VVER 1000/B466 reactors. The contract price is foreseen to be 3,997 Billion Euro and the reactor should have a 60 year life-time. Atomstroyexport / Areva NP said to be able to construct the first block in 6,5 years after start of construction and deliver the second block a year later. The reactors are according NEK to deliver electricity for 3,7 Euro cent per kWh. Over 200 experts from eight countries were needed to judge the proposals.
The Atomstroyexport consortium won the tender over the Czech Skoda Alliance consortium that budgeted 4,098 Billion Euro for the same configuration. Both Atomstroyexport and Skoda Alliance leader Skoda JS are majority owned by the Russian State and the Russian state company Gazprom, which makes it likely that the offers have been coordinated. Former Kozloduy director and current researcher at the Vienna Institute for Risk Analysis Georgi Kasschiev, who also blew the whistle on the INES 2 incident in the Kozloduy nuclear power plant earlier this year, criticised the choice as binding Bulgaria to nuclear power dependency on Russia. Russian's head of the Federal Agency for Nuclear Power called the choice a "big day for Russia" and he added that "Russia is now returning to the European nuclear power construction market."
New reactors
NEK argued its choice of two completely new reactors over finishing the already existing basis for VVER 1000/320 reactors with a higher chance on acceptance of these new reactors in the European Union. During an intensive information campaign preceding this decision, a coalition of Bulgarian and international NGOs had made clear to the public, interested banks, the EU and the Bulgarian government that the VVER 1000/320 would not be able to receive an operation permit in Germany because of safety concerns. They also had pointed to the bad track record of Skoda Alliance in Temelín in the Czech Republic.
The AES-92 has not been licensed before in Europe. At present Atomstroyexport is constructing an AES-92 power plant in Kudankulam in India, where construction started in 2001 and the first block is supposed to be loaded and become critical in 2007 with the second to follow two years later. The AES-92 is presented by Atomstroyexport as a Third Generation reactor. It is a further development of the VVER 1000/320 model, fitted out with an extra strong containment with stainless steel lining and a core-catcher.
Budget and construction time overdraws to be expected
The total building costs of the Belene NPP have not been made public. The almost 4 Billion Euro contract budget only represents the construction by Atomstroyexport. It does not include preparation costs, infrastructural works and an interim nuclear waste storage to be built on or near the site. Although Atomstroyexport mentioned a construction time of 6,5 to 7,5 years after start of construction, Bulgarian authorities spread the impression that the first block would be able to go on-line in 2013. It is not clear whether still to be expected delays because of a new Environmental Impact Assessment and running court cases started by Bulgarian citizens and environmental organisations are taken into account. Greenpeace and WISE / NIRS consultant Jan Haverkamp expects adaptations of the AES-92 to European standards, as well as the new involvement of Areva NP in the construction to lead to large delays and therefore called the estimated building time of 6,5 years as highly optimistic.
Over 2000 Euro / MW installed
The 4 Billion Euro value of the contract came as a surprise, which even forced Greenpeace and WISE / NIRS to adapt their October 30 comment of the project being "Russian, fast and cheap" after the October 31 press conference to "Russian, slow and expensive". Earlier this year prices were mentioned of around 2,7 Billion Euro with rumours that Atomstroyexport had made an offer for 2 Billion Euros. The reason for this high budget can be found in the choice for completely new reactors. Atomstroyexport is to dismantle the already built parts of two VVER 1000/320 blocks on the Belene site and is allowed to use these parts in Russia as spare parts for reactors there. These parts represent a value of several hundreds of millions of Euros. Taking this into account sees the Belene NPP roughly equalling the investment costs of the Finnish Areva built EPR reactor on well over EUR 2000 / MW installed.
Belene a financial nightmare
Financing the project appears to be a major problem for Bulgaria. After the Bulgarian government announced early October that NEK was going to own Belene for 51%, the financial broker Standard & Poor's directly downrated the company from "developing" to "negative" with Belene as reason. But also banks that had been claimed as interested by Bulgaria's Economy and Energy Minister Rumen Ovcharov withdrew their interest. This includes the Bayerische Landesbank, Commerzbank, Société Génerale / Komercni Banka, KBC / CSOB, Deutsche Bank and UniCredit / HVB / Bank Austria - Creditanstalt. These banks did so after they had been informed by Greenpeace, WISE/NIRS and CEE Bankwatch about the risks involved to the project. Risks mentioned next to financial ones included the fact that the NPP is to be built in a seismic active area, that the EIA - which denies this fact - knows large flaws and is already two years under court procedures, and that it is likely that Belene, once coming on-line, will have to face a highly dynamic saturated market. The banks argued their rejection of the Belene NPP project with economic reasons as well as the fact that the project does not fulfil their strict sustainability criteria. A coalition of NGOs approached UniCredit / HVB / BA-CA on Friday the 13th of October in 23 countries to bring the message across. Pressure on the UniCredit Group continuous to prevent the bank from participating in other future nuclear projects like Mochovce in Slovakia and Cernavoda in Romania.
On the October 31 press conference a group of six more banks, Euratom and the European Investment Bank were mentioned as source of finance. Deutsche Bank a day later confirmed to Greenpeace that it featured falsely in that list and definitely had no interest in the project. The other five banks, Credit Suisse, BNP Paribas, JP Morgan Chase, Merrill Lynch & Co. and the Lehman Brothers Bank were contacted early December by Greenpeace and CEE Bankwatch with information on the risks involved in Belene.
Euratom
The Bulgarian Government made an aggressive publicity run with the claim that Euratom was going to finance 300 Million Euro from the Belene NPP budget. Euratom spokes people denied towards Greenpeace that any application had been received, nor any communication had taken place to this respect. Mark Johnston of the Greenpeace EU Unit: "Someone is lying here."
Russian banks not sufficient
Next to the mentioned banks, the Bulgarian authorities mentioned interest from a Russian pool of banks, including Gasprombank, Sberbank, VTB and Vnesheconombank, with an export guarantee from the Russian state. Observers note, however, that it is likely that this group will not be able to cover the full 4 Billion Euro budget and that Western capital will be needed as well.
Source and contact: Jan Haverkamp, consultant for WISE Czech Republic. Nad Borislavkou 58, CZ - 160 00 Praha 6, Czech Republic.
tel./fax (home): +420.2.3536 1734 / mobile: +420.603 569 243
E-mail: jan.haverkamp@wisebrno.cz