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Elections in Bugaria, financial troubles and RWE cause confusion for Belene

Nuclear Monitor Issue: 
Jan Haverkamp, Greenpeace EU energy campaigner

The July 5, parliamentarian elections in Bulgaria saw a landslide. The ruling coalition of Socialists, ethnic Turks and the former Bulgarian king Simeon II's party was wiped away by the new party GERB (Citizens for European Development of Bulgaria). GERB, the political child of Sofia mayor Boyko Borisov, won with 39,7% of the vote 120 of the 240 seats in Parliament. Borisov is now creating a minority government that will seek votes for support from the right wing parties in parliament: the extreme-right nationalist Ataka and Order, Lawfulness and Justice parties and the centre right Blue Coalition of the Democrats for a Strong Bulgaria and United Democratic Front.

The Blue Coalition was the first party to openly speak out against the Belene nuclear power project, and there were hopes that it would be needed for a coalition with GERB. GERB's victory is so large, however, that it does not need to grant too many favours. And GERB itself is not very clear on Belene. Party officials including Borisov had stated over the last months that Belene would not get any financial support any more from the state. The nominee for finance minister, Simeon Djankov, currently working at the World Bank, declared that Bulgaria should invest in energy efficiency instead. On July 13, he announced in the daily Standart that in the preparation of the Belene project around 500 BGN (some 230 million Euro) must have disappeared as the Ministry for Energy and Economy informed him 800 million BGN was used for the deconstruction of the old unfinished nuclear power plant. Djankov claims that in other countries, this would have cost nothing more than 250 million leva.

Party leader Borisov, however, announced in a television interview on 12 July that he still stands firmly behind the project. Rumors are that he has been contacted intensively in the last weeks by the pro-Belene lobby within and outside his party. Also he, however, expressed doubts about the availability of state funds for the project.

And without state funding, Belene might be dead. Over the last years, 12 different Western banks withdrew initial interest from the project after they found out more details. French top-nuclear-bank BNP Paribas - after Citi the largest nuclear financier in the world and usually not caring about its nuclear image - initially brokered a 250 million Euro bridging loan for 2007, which was extended to 2008. In 2008 it also won the tender for financial adviser of the project. But over time it has virtually withdrawn its interest and declared that the project is too risky. It also stated publicly that it will not invest in Belene itself anymore.

The bridging loan ran out in November 2008 and the outgoing Bulgarian government counted on the freshly chosen strategic investor RWE to cough up some cash to run the program in 2009. RWE, however, did not like the current risks either and demanded that the Bulgarian side first secure its 51% participation financially before it was going to make any monetary commitments.

In a hasty move, the Bulgarian socialist party turned towards Russia and asked an earlier offer from Prime Minister Putin for a loan of 3,8 billion Euro to be re-opened. The Russian side is now still mulling over the conditions under which it would be willing to do this, and one of them seems to be a full government guarantee. But this would be against EU state aid legislation.

Nevertheless, bills need to be paid. In a bold move, the Bulgarian government injected in the hight of the financial crisis 300 million BGN into the Belene project in the form of an increase of shares by the Bulgarian utility NEK, which resides under the energy-giant Bulgarian Energy Holding (BEH EAD). This money was meant to cover ongoing costs and was transferred in December 2008. Standard and Poor's put NEK on CreditWatch and in July downgraded its rating from “developing” to “negative”. Greenpeace and the Bulgarian Green Policy Institute directly filed a complaint to the European Commission, because such a capital injection is only allowed when it is done in a way that would be similar to what a normal operator on the free market would do. They argue that the Bulgarian State is abusing its position as state to give Belene a financial advantage - an advantage that other operators on the electricity market do not have access to. With that, the capital injection would be illegal state aid and would have to be retracted. The European Commission opened an investigation which is still ongoing.

In the mean time, German energy giant RWE, the strategic investor in Belene, is trying to find a way to participate in the project without hurting its image even further. Its reputation already got severely budged because of shareholder opposition against the participation in Belene as well as several glitches in its German nuclear power plants. It has become clear that RWE will not accept the project as it was - and there continue to be severe doubts whether it will accept the project at all. To hedge against financial risks, RWE is currently looking for partners. It is in negotiations with Fortum of Finland, and two unnamed Swedish companies of which one is most probably Vattenfall. It also talks with InterRAO from Russia, complicating the picture of Russian control over the project even further. This would mean that not only the design and construction are done by Russia (Atomstroyexport), the fuel will come from Russia (TVEL), the money might come from Russia, but also operation would happen with Russian participation. This picture raises many eyebrows because the Belene project was always sold to the public with the argument of less energy dependence on Russia.

Environmental NGOs in Finland and Sweden are already gearing up to make possible investors aware of the problems surrounding Belene. In Germany, Belene is becoming increasingly the big blotch on the shirt of RWE and actions are in preparation on the side of environmentalists, but also RWE customers and shareholders.

Pressure is high on the whole project and all partners seem to try to create an image that things go forward - all waiting for an other one to make the first step out. The question does not seem any longer whether the Belene project will be stopped, but rather who will be courageous enough to pull the plug. Borisov has a unique chance to prevent further financial bleeding of his country into megalomania projects, unless he is hit by the virus himself. RWE has a chance to dump the Belene project as a first step towards making the company more sustainable. Your bets, please!

Source: Jan Haverkamp, Greenpeace energy campaigner, EU Unit Brussels, Belgium.
Contact: Jan Haverkamp (Greenpeace):
Heffa Schücking (urgewald):
Petko Kovachev (Green Policy Institute, Sofia);