Bulgaria Offers Serbia, Croatia 2% Stakes in Belene Nuclear Plant ahead of Putin Visit

Bulgaria's Cabinet has invited both Serbia and Croatia to participate as shareholders in the project for the country's future second nuclear power plant at Belene on the Danube.

This has become clear from the released transcript of this week's regular meeting of the Bulgarian government.

Bulgarian Prime Minister Boyko Borisov has sent formal letters to both the Serbian President Boris Tadic and the Prime Minister of Croatia Jadranka Kosor inviting their countries to participate in the Belene NPP with stakes of 1%, 1.5% or 2%.

After earlier this week the Russian news agency ITAR-TASS cited him as saying that he supported the Belene project "with all his heart," Borisov told the ministers that he denied giving any interview to ITAR-TASS.

"I never gave an interview to ITAR-TASS. I was cited based on God knows what sources about something that I never said that I support the Belene NPP with all my heart. In this case, however, I will say that I support the Belene NPP with my pragmatism because on our side we have Turkey watching to see what Bulgaria will do about Belene so that it can figure out what to do with its planned four nuclear reactors," Borisov told the Cabinet.

The PM complained that he is often misquoted in the international media as a result of numerous "re-quoting" and translation.

He revealed that the day before he spoke to Serbian President Boris Tadic about the Belene project, and that he invited Tadic and Kosor to respond by November 13, 2010, if their countries are interested in acquiring small stakes in the future nuclear plant.

November 13 has apparently been set as a deadline by Borisov because this is when the Russian Prime Minister Vladimir Putin is arriving to Sofia for high-profile energy talks. The Russian state company Atomstroyexport is supposed to build Belene but Bulgaria under Borisov has been haggling with its parent company Rosatom about the exact price.

According to Borisov, the participation of Serbia and Croatia in Belene "will make this project even more pragmatic because it will guarantee the markets for this power plant when it is built."

With respect to the upcoming visit of Russian Prime Minister Putin, Borisov explicitly told the Cabinet that Bulgaria must be pragmatic in its relations with Russia in order to attract more Russian tourists, and to restore the presence of its traditional food, drink, and tobacco products on the Russian consumer market.

"Let's use this meeting in order to escape from any possibilities for political speculation, and to fix our relations with the Russian Federation on pragmatic levels. As Mladenov said (i.e. the Foreign Minister - editor's note), they are no longer the Soviet Union, and we are no longer the former People's Republic," he said.

"I remind that for the South Stream gas pipeline and the Belene NPP we have signed contract which we must honor. Of course, with respect to the Belene NPP we will set many of the questions that we are interested in because the former government keeps trumpeting that the contract with the Russians is for EUR 3.97 B but they never say, or, rather, omit to mention deliberately that this contract includes EUR 500 M for consulting services, plus an EUR 250 M loan from BNP Paribas, for which we pay EUR 20 M interest every year. There are also EUR 780 M for infrastructure included in it, and there is also one other sentence which is extremely important. The Tsankov Kamak ( a notorious hydro-power project - editor's note) showed us that this is usually the bone of contention, and this is where the big money that is paid subsequently lies with, this is the so called inflation index," Borisov says before the members of his government. He also explains further:

"The way the contract for Belene has been signed, it is not fixed, the price could go up by EUR 2.5 B on top of that. Those who can do fast math can add that to the EUR 3.970 B. And then, one more thing - when the interest on the loaned money is included, the price is not EUR 3.970 B. This is what they did with Tsankov Kamak. When one hears EUR 120 M as price, of course, this sounds like a great project, why not do it. But when it goes up to BGN 1 B, of course, it is not great, but it becomes extremely disadvantageous. That is why Economy Minister Traikov and I will prepare a draft on these topics, and will have a conversation about what the Russian side thinks about all that.

The Prime Minister declares also that there is no discordance whatsoever within the Cabinet with respect to the statements of Finance Minister Djankov that not a single lev from the state budget will be paid for the Belene NPP, which are presented as contrary to Borisov and Traikov's support for the project.

According to Borisov, all this means that the government is insisting that the BGN 2 B already invested by the Bulgarian state in the construction of the Belene plant should also be calculated in its cost, and that the state budget will not be allocating additional funds for the construction.

Those are apparently expected to come from foreign investment.

During the government meeting Borisov did not mention any new details about the information that the Cabinet is holding talks with a company from Bavaria that would like to invest in Belene, or about the possibilities to extend the lives of reactors 5 and 6 of the Kozloduy NPP, or building a seventh or even an eighth reactor there.

The Belene NPP was de facto frozen in the fall of 2009 when the previously selected strategic investor, the German company RWE, which was supposed to provide EUR 2 B in exchange for a 49% stake, pulled out.

Subsequently, Rosatom offered Bulgaria a loan of EUR 2 B so that the construction can continue, in exchange for a stake in the future plant that the Bulgarian government could then buy out by returning the money. The offer was refused by the Borisov Cabinet which also made it clear it would construct the Belene plant only if an European (apparently meaning EU or Western European) strategic investor can be found.

The government has started a tender to select a consultant that is supposed to help it pick an investor; the project, which originally was supposed to be 51% owned by the Bulgarian state, is to be restructured based on the fact that the National Electric Company NEK has already spent BGN 1 B on Belene. Over the past months, the Borisov Cabinet made it clear it might agree on a 20-30% stake in the future plant.

The recent news about the Belene project included Serbia's interest to participate in its with a share of up to 5%, and the interest on part of the Chinese government, which, however, says that the use of Russian technology is an obstacle to the participation of Chinese investors.

Under Bulgaria's preliminary contract with Atomstroyexport signed in 2008, the construction of the Belene plant with two 1000-MW VVER nuclear reactors is supposed to cost EUR 3.997 B.

As the contract expired on September 30, 2010, Bulgaria and Russia decided to extend it by 6 months until they reach a final agreement on how much the construction of the Belene NPP will cost.

Borisov has made it clear he is demanding a fixed price from the Russians, which according to hints by Economy Minister Traikov should not be more than EUR 7 B.