Bulgaria: Nuclear questions

After the decision formally to suspend the project

GMT 10:15 2011 Tuesday ,31 May

Arab Today, arab today After the decision formally to suspend the project

Belene nuclear power plant
Bulgaria - Arabstoday

Belene nuclear power plant The future of Bulgaria’s proposed Belene nuclear power plant (NPP) once again hangs in the balance after the decision formally to suspend the project while reassessment takes place. The 2000-MW station is seen as central to meeting Bulgaria’s energy needs and has strong government backing, yet questions of financing and safety remain. A new plant should also help boost the economy as Bulgaria is south-eastern Europe’s biggest electricity exporter, doubling its power exports last year, according to the international press.
In early April, the government announced that the construction at Belene would be halted for three months as an assessment of outstanding cost and safety issues is undertaken. The decision was taken with the agreement of the major contractor, Atomstroyexport, Russia’s state-owned monopoly nuclear energy construction and services exporter, majority-owned by state nuclear power firm Rosatom.
On April 13 Bulgaria signed a €2m contract with British bank HSBC for the execution of a cost-feasibility study on the plant, due to be submitted on June 1, giving the government a month to ponder its findings before a decision must be reached on whether to push ahead with construction. Controversially, HSBC will also be awarded 0.95% commission on any external funding it sources for Belene.
Belene, on the Danube in northern Bulgaria, would be the country’s second NPP, the first being upstream at Kozloduy, which currently operates two 1000-MW reactors. The plant has been mooted since the 1970s, but has been subject to a series of cancellations and delays. Having been abandoned part-complete in 1990, Belene came back onto the agenda in 2002, with a process of planning, approval and selection of contractors and consultants following. Bulgaria’s position in an energy-hungry region combined with its capacity made it a power exporter with significant potential for growth.
The closure of four ageing 440-MW reactors at Kozloduy between 2002 and 2006 as a precondition for Bulgaria’s EU accession (a deeply unpopular move at the time in Bulgaria) made the case for the construction of a new NPP and Belene all the more strongly. Following the Kozloduy shutdowns in 2006 in particular, Bulgaria’s energy export capacity was reduced, allegedly leading to regional power shortages.
In 2008, the then Socialist-led government contracted Atomstroyexport to construct the plant for a reported €4bn, with first ground being broken that year. German energy firm RWE, meanwhile, became the government’s strategic funding partner, taking a 49% stake in the plant in return for capital investment.
However, in October 2009, RWE announced that it was withdrawing from the project following several months of speculation about its involvement and the future of the NPP. While this was partly due to RWE’s strategy of withdrawing from its non-core markets in the wake of the international economic crisis, it also brought nagging questions surrounding Belene sharply into focus.
First and most important of these was whether Bulgaria could afford the big-ticket project at a time of serious fiscal cutbacks, as the forecast cost of the project spiralled, with some estimates going as high as €10bn, more than twice the original sum. Furthermore, concerns were being raised about whether Belene would be able to pay for itself, even given regional demand. There are also long-standing worries raised by environmentalists about the safety of the proposed plant given its location in a seismically active region.
It is ostensibly for these reasons the Belene project is also rather unpopular in neighbouring Romania, which has its own NPP at Cernavoda. Finally, the active involvement of Rosatom – and the possibility that it might take RWE’s stake in Belene – has sat awkwardly with Bulgaria’s supposed aim of reducing its energy dependence on Russia, which provides almost all the country’s gas.
The Belene project has been de facto frozen after RWE’s pull-out, at which time Rosatom revised its estimate of the cost to €6.3bn. This price was affirmed in November 2010 in a non-binding agreement by Bulgaria’s state-owned National Electricity Company, much to the consternation of the current government (now led by the right-wing GERB party of Prime Minister Boyko Borisov), which has stuck to its own valuation of €5bn. Rosatom has said that, in the absence of a new agreement, it may take the case to arbitration.
Meanwhile, the serious concerns surrounding the fate of the Fukushima NPP in Japan following the devastating earthquake and tsunami there in March has fuelled the debate about Belene’s safety. The EU has called for further examination of the site, despite having given the green light some time ago, while a small but vocal minority of Bulgarians, including environmentalists and the Blue Coalition, a right-of-centre opposition political alliance that previously backed GERB, have renewed calls for Belene to be scrapped.
While it might be expected that the project be mothballed again, Borisov – previously an ardent advocate of the reopening of the Kozloduy reactors – seems determined to get the process moving again. Bulgaria, which has substantial coal powered generation centred in the Maritsa Valley and a growing wind sector, has the potential to achieve an enviable energy mix, but some industry leaders are concerned that the concentration on Belene is proving unnecessarily detrimental to other segments.
“It is sad to see that the prime minister and parts of the nuclear lobby seem eager to create a completely unnecessary fight over ‘either nuclear or renewable’ instead of seeing how both can co-exist and complement each other,” Sebastian Noethlichs, executive director of the Bulgarian Wind Energy Association, told OBG. “The government says the project will be evaluated objectively. At the same time the financial analysts evaluating the viability of the project, HSBC, will be paid a commission on the financing should the project go ahead.”
There is little doubt that Bulgaria’s energy potential is substantial, and that it can have a role as an exporter. A new NPP would play a central role in the future, and could prove an economic boon to the country, particularly as it looks to build export-oriented businesses. While the exact outcome is still uncertain, we have not heard the last of Belene.

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