13 Oct 2010 15:15

Russia, Bulgaria extend agreement on Belene nuclear plant construction to March

SOFIA. Oct 13 (Interfax) - Russia and Bulgaria have extended the agreement on construction of the Belene nuclear power plant for six months, until the end of March 2011, Bulgarian media reported.

The Rosatom state corporation confirmed the information to Interfax. The general contractor for the project, Atomstroyexport, also plans to work with Bulgaria's National Electricity Company to determine a firm price for the nuclear plant construction.

Bulgaria has thus fended off potential penalties totaling 2 billion euro that Atomstroyexport was ready to file in court if an extension to the agreement, which expired at the end of September, was not agreed, the Bulgarian newspaper Klassa reported.

Russia and Bulgaria expect to agree the final price for the nuclear plant by December. They initially discussed adjusting the base price (about 4 billion euro for two blocks) by the inflation rate, and working to agree on which inflation rate to use: that in Russia, the EU or Bulgaria. Now the Bulgarian side is insisting on a fixed price.

Bulgarian Prime Minister Boyko Borisov has said the cost of Belene should not exceed 7 billion euro.

Plans are to appoint the consultant for selecting a new strategic investor for the project in the first quarter of 2011. The former investor, German RWE, backed out of the project last fall.

The consultant will need 18 months to bring in new investors. Thus, construction of the nuclear plant might begin some time around mid-2012, the newspaper said.

By March is will be clearer what stake in Belene the Russian side may receive. The Bulgarian side is willing to reduce its stake in the plant to 20%. Serbia and China have also expressed interest in the project.

Russia had proposed allocating 1.9 billion euro to the project in 2010-2011 in exchange for a stake in the plant. Rosatom was willing to sell a portion of its stake to a strategic investor. However, Bulgaria did not respond to the proposal.

The agreement between Atomstroyexport and National Electricity Company was signed in January 2008. Rosatom chief Sergei Kirienko said previously that inflation might raise the final price of the project to 5 billion euro, but that the cost would not exceed 6.5 billion euro under the pessimistic forecast.

Rosatom had provided over $400 million in financing for the project by the middle of summer this year and work amounting to more than $300 million that has been carried out a must be paid for soon. Thus, total spending amounts to $700 million-$750 million.

Bulgaria stands to loses $1 billion and more if the project is suspended, a source close to the project said previously. In particular, the Russian side might impose fines totaling $300 million and more.