Increasingly thrifty are now rulers regarding their statements about the future of the country’s project for a second nuclear power plant Belene. Even after his visit to Moscow earlier last week Minister of Economy and Energy Traicho Traikov and Finance Minister Simeon Dyankov were rather taciturn on issues related to the energy sector.
In an interview with one of Bulgaria’s national television channels Minister Traykov laconically noted: The situation with Belene has not changed. There are three things that are still unclear – the allocation of risk escalation indexes and the credit costs. Currently there is no reason to believe we may take a final decision. The case is dynamic, circumstances change. The moment we have a decision, we will put it on the table.
Simeon Dyankov in an interview for the national radio BNR forecast a new extension of the negotiations for the plant. This term (Editor’s note: the March deadline of the agreement to extend the period of negotiations between NEC and Atomstroyexport, a subsidiary company of Rosatom over the final price and terms for the construction of new nuclear power) has already been extended many times and given the economic situation, and not just the specific energy situation in Europe, I expect that there will be a need for more time for this agreement… Now the most important thing is to decide whether our country needs such a project and whether it is financially sensible. This will become clear in the second half of this year, Dyankov pointed out.
Far more attention deserves the answer of the Finance Minister on whether the U.S. Fund intends to enter as an investor in the new NPP. I have not participated in such talks – he said – but such an idea is potentially interesting for Bulgaria.
Finally, Minister Traicho Traikov spilt the beans. After a cabinet meeting on Wednesday (February 8) he admitted that an American company had expressed interest although it not in writing. When an investor is interested in a project we are working, we have a procedure – first, the interested party sends a letter of intent. We expect such a document to be produced soon. After receiving the letter we will have to sign a confidentiality agreement that has already been prepared. After that, within the financial working group we can start analyzing what the proposals are, what opportunities we have and what is there on the table, said Mr. Traykov.
Beyond doubt is that the inclusion of a U.S. fund into the project will give it a very serious boost. According the memorandum between the NEC and the Russian state company Rosatom signed in December 2010, a Project Company Belene was created (Belene Power Company JSC), in which NEC will hold a 51-percent stake and Rosatom will have 47 percent. The remaining two percent will be divided between the French technology company Altran (Altran) and a leading Finnish corporation Fortum (Fortum Corporation), with which agreements were also signed. Both have the option to increase their stakes to 25 percent at the expense of either of the other participants.
Judging by the information that appeared previously in the Russian media, the Finns intended to increase their share in the Belene to 20 percent. Fortum is in very good trade relations with Russia, where its sister company operates several plants in the Urals and Western Siberia. Last week it became clear also that Rosatom attracted the Director General of the Finnish Centre for Radiation Safety Jukka Laaksonen. He will assume the position of vice president of the subsidiary company, Rosatom Overseas, which was created for the offering of Russian nuclear technologies on the global market. So in the warm Russo-Finnish relations a U.S. involvement in Belene may indeed be the key factor to unlock its potential for realization.
How much money the Americans will invest and in what exactly they will take part is hard to say now. Sources of the Banker claim that the fund wants 20 percent of the plant, while at the same time they will offer a loan for the Bulgarian share at an interest of 4-5% plus a grace period for the duration of construction.
This way it appears that from the 49 percent stake of the project, for which investors are being sought after, buyers have turned up for 41% and the stake that remains for the Russians is between 7-8%, plus the building of the facility itself. Of course, the possible reallocation of shares can only be done after negotiations.
Professionals from the industry, however, emphasize that to get there, there are some serious questions that need to be addressed. And invariably the first one is how much the construction of the second Bulgarian nuclear power plant will cost? Moscow mentioned the amount of EUR6.3 billion, but it was rejected by the Bulgarian as too high. Whether the price will be fixed or variable, and who will bear the financial risk – these are questions that will inevitably interest investors from any country they may be.
Among all these unsolved issues, what has to be noted is that the question now is no longer about whether the project will be implemented or not, but rather to clarify the financial and economic details around it. The same conclusion crystallized from the speech of Russian Energy Minister Sergei Shmatko after his meeting with Traycho Traikov and Simeon Dyankov: For the time being we have agreements signed, and one of the parties wants to clarify some details around them. These are issues related to co-investment and lending. All this will be taken into consideration in formulating the economic model.
Some energy experts are even more direct in their positions. I have participated in a number of such negotiations in the field of gas and nuclear energy. And I can tell you that they always obey a rule – as you get closer to making the final decision, the less information leaks out of the negotiating team. In this case I think we’re right in that situation. I think the Belene is coming to a positive outcome, professor Atanas Tasev told the BANKER.
