Bulgarian parliament set to lay Belene in its coffin

By bne IntelliNews January 30, 2013

bne -

The Bulgarian government is set to use its majority in parliament to enforce its 2012 decision to scrap the Belene nuclear power plant project, the prime minister reiterated on January 29, despite a recent referendum suggesting the country wants it to go ahead.

In the January 27 referendum, voters supported restarting Belene, but the turnout was woefully short of the necessary minimum. Some 60.6% of votes approved resuming the project, hoping it would create jobs and cut power bills, but the turnout was just 20.2% - too low to make it binding.

However, having scraped just above a 20% threshold, the issue now has to return to parliament for a final decision. That puts it back in the hands of a lower house dominated by allies of Prime Minister Boiko Borisov.

The PM has indicated already that he will instruct his GERB party to vote against. Speaking to foreign investors on January 29, Borisov - who abandoned the project in March 2012 on the grounds of cost and a lack of Western investor interest - confirmed plans to build a reactor at Bulgaria's operational Kozloduy nuclear plant and to extend the lifespan of its two existing 1,000-megawatt reactors until 2030.

However, with parliamentary elections set for the summer, the main opposition Bulgarian Socialist Party, which called the referendum, has insisted it will push ahead with Belene should it come to office. That marks the issue as a central plank in the upcoming vote, and the referendum result a worry for the government, with GERB maintaining a slim lead at 24% approval in recent polls.

"I cannot guarantee the fiscal stability of Bulgaria after July, because if the Socialists win the elections and push ahead with Belene ... who knows what the fiscal framework of the state will be," Borisov claimed, according to Reuters.

The 30-plus years that the Belene project has been under construction must serve as some kind of a record, and has become a symbol of government waste, corruption, incompetence, economic illiteracy and grubby politics.

The Socialists were in power when the latest move to restart building the 2,000-megawatt (MW) plant was made in 2005, with an international tender to choose a reactor maker. Russia's Atomstroyexport won the contract, and officially began building the plant in September 2008, some 27 years after the site was originally approved in 1981. Completion of the two reactors was forecast for December 2013 (unit 1) and June 2014 (unit 2).

However, only preliminary site activities were carried out and later suspended because inevitably things immediately started to go awry: delays and other problems saw the plant's price soar above the originally estimated €4bn; the global crisis struck in 2008; the government's strategic investor, German utility RWE, pulled out in 2009; and the Bulgarian Socialist Party was ousted in elections that year by Prime Minister Boyko Borisov's GERB party, which after waffling for several years over the subject finally killed it in March.

That decision infuriated the Russians (perhaps understandably), as well as the Bulgarian Socialist Party and its supporters (less understandably so). The Russians have now decided to sue to Bulgarian state for more than €1bn in an international arbitration court to try to recoup some of the losses they claim they have incurred, while the Bulgarian Socialist Party is pushing to restart a project they say is essential to Bulgaria's economy and its future energy security. The Russians may well have a point, but critics say the arguments put forward by supporters of Belene are economically illiterate.

The advisory firm Candole Partners in a 2010 report calculated that Belene would have to sell electricity anywhere between its variable cost (€21 per megawatt hour) and its total cost (€51-80/MWh), which is three- to ten-times higher than the price that the country's other nuclear plant at Kozloduy sells at on the regulated market.

Meanwhile, on December 5, Novinite revealed that a report from the Public Financial Inspection Agency (PFIA), now before a parliamentary committee, had found that a total of BGN300m (€153m) allocated in the state budget in 2008 for the creation of a Bulgarian-German joint venture to build the Belene plant had disappeared. According to the PFIA report, the money was spent even though the Bulgarian-German company was never registered.

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