Bulgarian ministers indicted over Belene project

30 November 2016

On 18 November, Former Energy Minister Delyan Dobrev became the third minister to be indicted over the abandoned Belene NPP project. In October, the Chief Prosecutor demanded that Dobrev be stripped of his immunity to face charges. The outgoing government denies he was involved in financial transfers that the prosecution alleges, were approved by his ministry and made by state-owned National Electricity Company (NEK) to Russia's Atomstroyexport (ASE). Dobrev served as Bulgaria's Economy, Energy and Tourism Minister from March 2012 to March 2013.

The previous day, Bulgarian prosecutors charged another former energy minister, Rumen Ovcharov, with negligence in relation to contracts signed with ASE in 2006 over the cancelled Belene project. Ovcherov, who headed the Economy and Energy Ministry from 2005 to 2007, was accused of “failing to exercise control” over the work of two directors at NEK when the company signed a contract for the initial design of the two-unit Belene NPP. The agreement was concluded in violation of Bulgaria’s public procurement rules and resulted in €193m ($204m) of losses for NEK, the prosecutor’s office said.

In October 2016, the prosecutor charged two former directors of NEK, Lubomir Velkov and Mardik Papazyan, and Petar Dimitrov, who succeeded Ovcharov as energy minister in 2007, with alleged malpractice in relation to the Belene project. In June 2016, the Geneva-based International Court of Arbitration (ICA) ordered NEK to pay €620m in compensation to ASE for components which had already been manufactured before the cancellation of the project in 2012. Last month the Bulgarian parliament formed a public inquiry committee to investigate the Belene case. Bulgaria and Russia have agreed to settle the outstanding claim by the end of the year.

Earlier in November, Kremlin spokesperson Dmitry Peskov said Presidential election results in Bulgaria are unlikely renew talks on Belene or the South Stream pipeline project. However while the prospects to revive them "are minimal", Peskov stressed that Russia had always sought to expand cooperation with Bulgaria and would continue to do so.  His comments were a response to the election of Rumen Radev as Bulgaria's new President, which precipitated the resignation of the centre-right government of Boyko Borisov.  Radev has said he will week to improve ties with Russia and called for EU sanctions on Russia to be revoked. However, Bulgaria is expected to see months of uncertainty and interim administrations in face of difficulties in forming a new government.

Russia abandoned the South Stream pipeline in December 2014, citing EU opposition and Bulgaria's reluctance to issue construction permits for the pipeline's offshore sections. The project was designed to carry gas from Russia under the Black Sea to Central Europe via Bulgaria and Serbia. Construction of the Belene NPP was cancelled by Boyko Borisov's previous elected government in 2012, but recently there had been indications of its possible revival after the ICA ruling. Before the cabinet's resignation, Deputy Prime Minister Tomislav Donchev and Energy Minister Temenuzhka Petkova had been arguing the Belene NPP might be built, but only if a private investor was found.

The money which Bulgaria owes to Russia, will still have to be paid, in spite of the resignation of the government. This expenditure has been approved by parliament and has legal force, warned the Deputy Chairman of the Energy Commission, Valentin Nikolov. In order for interest on the debt to be waived, the payment has to be made by 15 December. “If the new government comes to power and decides not to fulfil this commitment, then this amount will have to be added to the sum and it will increase together with the interest which is accrued daily,” explained Nikolov.

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