Cause and Effect in European Politics and Law

Russia will finance the construction of the Belene nuclear power station

Ralitsa Kovacheva, February 20, 2010

Russia will finance the work on the Belene nuclear power station project until a strategic investor is chosen. This is what became clear after the meeting between the energy ministers of Bulgaria and Russia Traycho Traykov and Sergey Shmatko. And interesting details is that it was this morning that the Bulgarian Energy Holding (BEH) published the announcement for a tender to choose a consultant for the Belene project. Because the finding of a strategic consultant is expected to take between a year and a year and a half, the Bulgarian and the Russian side decided that this should not prevent the work on the project.

This is why Russia will provide funding against which it does not expect anything from Bulgaria - neither a corporate guarantee from the National Electricity Company (NEC) nor BEH. In spite of the insistent questions of the journalists, the Bulgarian energy minister Traycho Traykov refused to comment on a specific scheme of financing, explaining that this is a matter of tools. He only said that a project company would be established which will build the Belene station. It is to be decided with what apport Bulgaria is supposed to take part:

"A calculation of the Bulgarian apport should be made - this includes the value of the assets of the construction site and the site itself because it exists and the Bulgarian government has already made it possible such a project to be realised at this particular site, as you know, this is an asset by default and the expenditures are already spent for assets and for consultancy services".

Minister Traykov explained that with this capital an association would be established and it will be able to use debt financing and to increase its capital up to a specific amount of shares. He added there were different ways the association to be structured in such a way that the project to become attractive for a strategic investor after the consultant is ready with the tender. It is expected the consultant to be chosen by mid-June.

To the question what funding the Russian side is willing to provide, the Director General of the Russian state corporation Rosatom Sergey Kirienko replied "as much as it is necessary". This caused the indignation of the journalists and Kirienko was forced to specify:

"For 2010 350-400 mn euro will be necessary for Belene. This is payment for the next stages of the production of equipment for the station and for direct organisation of the activities at the site. The financial needs for 2011 depend on the activities in 2010 but are estimated to be around 1-1.5 bn euro".

Rough estimations show that the total amount is around $2 bn. This amount was mentioned as a possible loan from Russia by minister Traycho Traykov on Tuesday after the visit of the Chairman of the Board of Directors of Gazprom Alexey Miller. This morning, however, the financial minister Simeon Dyankov said in an interview for the Bulgarian National Radio that he would now allow a state loan from Russia for the Belene power station.

And regarding what the Russian side will get against its money, Sergey Kirienko explained that Rosatom was ready to invest part of the money on a temporary basis, which means that the money would be returned by the future strategic investor. Another part of the money could be invested against shares in a limit, defined by the Bulgarian government, Kirienko said - again without quoting any numbers.

The Russian energy minister Sergey Shmatko specified that at the meeting on Friday all major energy projects between Russia and Bulgaria were discussed. And underlined that Bulgaria remained the most important and significant partner in the South Stream project. Later it became clear that during the meeting minister Traykov asked his Russian counterpart about the publications that Bulgaria would be replaced by Romania in South Stream.

Shmatko noted with satisfaction that on Friday the agreements from the 13th session of the Bulgarian-Russian Committee for Economic and Science and Technology Cooperation started to realise. The session took place in Sofia on December 10th and 11th. The Russian side is expecting the technical issues to be concluded by the end of March and the necessary decisions to be taken so as practical work could start. And it is ready to start financing the project in very short terms.

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