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Belene nuclear project is sinking

Nuclear Monitor Issue: 
Jan Haverkamp, Greenpeace EU energy campaigner

Since the new Bulgarian government has discovered that the price tag for the Belene nuclear power project on the shores of the Danube is expected to massively inflate from €4 to €10 billion Euros (US$ 5.8 – 14.5 billion), Prime Minister Boyko Borisov has desperately been looking for ways to pull the plug.

Prime Minister Borisov has recently put three €300 million payments to Russian building contractor Atomstroyexport on hold while the viability of the project is reassessed. Russia and the Russian companies involved in the project are not exactly happy with this new approach. Reports in the media even allege that Russian diplomats and energy companies have gone as far as to threaten a gas war next winter, unless the Belene project is resurrected.

Any compensation payments for breach of contract with Atomstroyexport are likely to be high, but still several times lower than what the Bulgarian government suspects might be the losses arising from Belene for Bulgarian taxpayers. But German energy giant RWE, 49% investor in Belene, hoped to gain billions from the project and is therefore shopping around for partners.

Experts believe that RWE has approached Russian energy company InterRAO, two unnamed Swedish companies – perhaps Vattenfall or ABB – and Fortum, from Finland. But things do not seem to be going well. Fortum's CEO Tapio Kuula told Greenpeace only last week that it had no interest whatsoever in being involved. And over the last few years Franco-Belgian utility GdF Suez / Electrabel and twelve – yes, twelve – banks have withdrawn their interest.

The question now is who will kill the project first. Bulgarian energy minister Traycho Traykov has already announced that he will make a final recommendation at the end of September. Borisov is expected to make a final decision in November. If Bulgaria decides to put Belene out of its misery, RWE will be able to save face and blame the government. But given the lack of progress, it is not inconceivable that RWE could step out before then, giving Borisov the opportunity to blame the Germans.

Russian energy Minister Sergei Shmatko told journalists on 17 September that his country is ready to consider an investment participation in the nuclear power plant should Bulgaria decide to sell its state-owned stake. This, however, will not change anything in the economicality of the project, but looks more like a last attempt from Moscow to save its 4 billion Euro contract.

Jumping ship
Prime Minister Borisov is also behind a decision to dismantle energy giant Bulgarian Energy Holding (BEH), which was initially set up to provide sufficient collateral to generate loans for the Belene project. But the banks were not duped and BEH only managed to collect a €300 million cash input from the state budget that is under EU investigation as alleged illegal state aid.

Because of the economic downturn and the related 30% slump in electricity exports, 51% Belene investor Bulgarian state utility NEK has dived under the reserves limit set in its €250 million loan contract with BNP Paribas - the only loan it could secure for the project. This means the French bank has the right to recall its loan. The only alternative for NEK would be to renegotiate terms with BNP Paribas, which could lead to a doubling of the so far very low 4,8% interest rate.

The conclusion is clear: Belene represents a huge financial risk for Bulgaria, not to mention a serious environment risk. The project is sinking and the question now is who will jump ship first.

Source and contact: Jan Haverkamp, Greenpeace EU policy campaigner dirty energy & expert on energy issues in Central Europe.
Tel: +32 2 27419 21