Bulgaria agrees state funds for Belene compensation

4 October 2016

The Bulgarian parliament on 28 September passed a bill authorising the government to release funding to Bulgaria’s National Electric Company (NEK) to cover the €620m ($695m) compensation owed to Russian nuclear equipment manufacturer Atomstroyexport for the cancellation of the Belene NPP project, a statement on Bulgaria’s energy ministry website said. The project was cancelled in 2012 after the reactors for the two unit NPP had already been manufactured (one fully completed and one 90% completed). In June the Geneva-based International Court of Arbitration (ICA) awarded the compensation to Russia.

The bill will allow the energy ministry to release a loan to NEK without requiring the company to pay interest or provide collateral. The bill means the energy ministry’s annual budget will increase, which will create the legal grounds for providing the loan to NEK. Parliament rejected an opposition proposal to cap the amount of the loan.

Under EU regulations on state aid Bulgaria’s decision must now be approved by the European Commission EC, the energy ministry said. This could take about three months and cost Bulgaria several millions of euros in interest charges because the ICC binds NEK to pay €167,000 in interest every day until the compensation claim is settled in full.

The Bulgarian government announced earlier that, based on advice from international law firm White and Case, it would not appeal against the June ICA ruling. However, Energy Minister Temenuzhka Petkova disputed the way interest on the principal had been calculated in the ruling and Atomstroyexport accepted a partly reduced amount accepting four of seven miscalculations noted by Bulgaria.

The Chairman of the Energy Commission in Parliament, Delyan Dobrev, said he does not expect any problems to arise with the EC on the state aid to NEK. As to future options, he said Bulgaria could not afford the investment to build the Belene NPP, although a private arrangement may be possible.   

However, nuclear industry specialists in Bulgaria believe Belene should be completed. However, Stanislav Georgiev, Executive Secretary of Bulgarian Atomic Forum Bulatom told a Round Table side event at the 60th session of the IAEA General Conference in Vienna that it would have to be a political decision and “politicians are unpredictable”.

He noted that the energy produced by Bulgaria’s Kozloduy NPP is cheaper than from any other energy source. The plant’s two VVER-1000 nuclear units (5 and 6) produce 31% of Bulgaria’s electricity but demand is growing by 2-3% a year. Both units are currently undergoing life extension which will also increase their output to 104%.  However, “Bulgaria must think about building new nuclear units,” he said, “but it is up to the politicians. The two possibilities which have been considered are to revive the Belene project or to build a seventh unit at Kozloduy, for which negotiations have been underway with US Westinghouse. Currently the government says that for any new NPP project there would be no state guarantees; no agreement on fixed prices for the energy produced; and the offer would have to cover both technology and finance.

Georgiev believe the Belene option is clearly the best, given that the site is already licensed, an environmental impact assessment has been conducted the main equipment has already been produced. The last offer made by Atomstroyexport in 2016 for the two units was €6.5bn ($7.3bn) without the costs of financing, inflation and expenses. By contrast, Westinghouse’s 2015 offer to build one AP1000 unit at Kozloduy was $7.8bn, without the costs of financing, inflation and expenses. Moreover, he told NEI that Westinghouse had proposed just to build the plant but would take no responsibility for commissioning it. He noted that no further negotiations on this project were taking place. 



Privacy Policy
We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.