Belene project creates unholy alliance in Bulgaria

Belene project creates unholy alliance in Bulgaria
By Denitsa Koseva in Sofia June 6, 2018

The Bulgarian parliament is due to vote on plans to restart the Belene nuclear power station project on June 6, and with the main parties unified behind it the controversial project is almost certain to get the green light from MPs. 

While nearly every energy expert and economist in the country says that the construction of the Belene nuclear power plant is unnecessary, expensive and even unsafe, Bulgaria’s ruling coalition and its main opponent in parliament, the Socialist Party (BSP), have united in their determination to restart the project. There are virtually no dissenting voices in parliament, as even the smaller parties either formally support it or will not oppose it. 

The unlikely alliance between the two main parties has created the joke about the “GERBSP party” ruling the country, as well as raising concerns about possible high-level and large-scale corruption and about a dangerous turn towards Russia. 

Sofia would still have to formally decide who will build the reactor after the parliament votes, but market experts suspect that Bulgaria has already agreed to give the project to Russia’s Rosatom. The Russian company has said that it will participate in the project, although the government has said that China’s CNNC and French Framatom are also interested. 

The parliament vote neatly coincides with visits to Russia by both President Rumen Radev (of BSP) and Prime Minister Boyko Borissov, leader of the ruling GERB party, which gave the signal that they want to warm up relations with Moscow and gain back President Vladimir Putin’s benevolence. Moreover, the lack of information prior to Borissov’s departure for Moscow gave rise to speculation on the reasons for his sudden visit and its connection to the restart of the Belene project.

Back to the drawing board

Plans to build the Belene power plant were scrapped in 2012, but Sofia was forced to reconsider after Bulgaria was ordered to reimburse over €600mn to Russia’s Atomstroyexport (a unit of Rosatom), which had won the contract to build the power plant and already started work. Since then, the project to build the country’s second nuclear power plant has been in limbo.

In mid-May, however, the government announced that it will ask parliament to lift the ban on Belene’s construction. Two weeks later, the BSP asked the parliament to do the same thing, and a debate is scheduled for June 6. Such coordinated actions between the opposition and ruling party were unprecedented for Bulgaria.

But while the main parties are united, there has been strong criticism from outside the parliament. Democratic Bulgaria, a newly established coalition of opposition parties that is not represented in the current parliament, said in a statement that the revival of Belene project is a “deception of the right-centrist voters and a drastic deviation from the European path, and an attempt to make Bulgaria’s energy dependence from Russia impossible to overcome in the next decades”.

Experts also claim that Russia’s involvement will open the door for corruption and substantial bribes for members of the ruling party in return for picking a Russian company for the multi-billion euro project. 

Vladislav Panev, co-chairman of the environmentalist party The Greens and chairman of the board of directors of Sky Asset Management, told bne IntelliNews that the restart of the project will be used for syphoning money from the state, most likely with Russia’s help.

“Even if syphoning the state without Russia’s participation could be possible, this is unlikely to happen in practice. Although, unlike previous years, I expect Belene to be a purely Bulgarian corruption model from now on, with the special participation of international partners, who will protect their interests just as Rosatom did,” Panev said.

He added that financial incompetence or corruption are the most likely reasons for the government’s sudden desire to restart the Belene project. “There can be two or a number of answers [to the question of why the government wants to revive the project]. The first is that in the cabinet there are enough financially illiterate people who think based on emotions and on public support for the project, not on numbers. Then it turns out that the state will lose billions due to managerial incompetence. The other option is corruption. Expenses in billions in the Bulgarian environment mean significant commissions and this argument cannot be neglected at all,” Panev says.

Schrodinger’s reactor

Panev believes that the project has little chance of being completed, but will be started and developed for some time as a tool for more corruption, before most likely being abandoned. 

“The longer the project is being kept in a semi-live and semi-dead state, just like Schrodinger’s cat, the bigger the losses for the state will be. Probably the incomes for those close to power [will be bigger] too,” Panev said. The thought experiment designed by Austrian physicist Erwin Schrödinger in 1935 presents a cat that may be simultaneously both alive and dead, a state known as a quantum superposition, as a result of being linked to a random subatomic event that may or may not occur.

Even setting aside the potential for large-scale corruption, other opponents of the project claim the government’s efforts to revive the project are simply illegal. Kaloyan Staykov, senior economist at the Institute for Market Economy, says that the project cannot be restarted as it was terminated by the parliament — in fact by a previous Borissov government — back in 2012.

“The project was not frozen [by parliament]. The project is terminated … When there is a terminated project, not just frozen, everything starts from scratch,” Staykov told bne IntelliNews.

On the other hand, Bulgaria’s energy ministry claims that the project was frozen and that all documents, permits and procedures are still valid.

Yet the current government does not seem to have a reasonable economic explanation as to what has changed since 2012 that would push the country to spend so much money on the project it previously abandoned.

In 2012, the parliament backed the then government which argued that the country’s priority was not to build new capacities and to encourage consumption, but to focus on energy effectiveness. “This argument has not changed in the past six years and I do not understand where the whole debate on Belene comes from,” Staykov said, and added that none of the arguments that the parliament took into consideration when voting to stop the project in 2012 have changed.

“Corruption scheme of the century”

At the time, Borissov fiercely opposed the Belene project, claiming that it was the “corruption scheme of the century”. The parliament also decided to back the government’s request due to the high seismic risk at Belene, and agreed with government that the potential cost of construction was beyond Bulgaria’s possibilities, and that the project had not proved its economic effectiveness. Again, these factors remain valid. 

Exports of electricity to the region are being pointed out as one of the main reasons in favour of restarting the Belene project. However, according to energy experts, Turkey and Greece, to which Bulgaria mainly sells electricity, are focusing on building their own renewable energy capacities. Many of the countries in the region are also putting efforts into increasing their energy excess production.

“The lack of predictability of consumption and of electricity prices not only in Bulgaria, but also in the region, make the construction of 2,000 MW of new capacity extremely risky, in my opinion,” Staykov said. He added that the country rather needs more flexible energy capacities that will meet the significant differences in consumption during the summer and winter months.

Panev commented that spending years on the Belene construction case will freeze private investments in new renewable energy projects, in energy efficiency, electricity transportation and storage.

According to Staykov, the question of whether Bulgaria needs to build Belene is the last in a series of unasked questions: exactly what energy mix the country needs to have a competitive economy, what capacities it currently has and which of them will be shut in the coming years, as well as whether they will actually be out of exploitation.

He also said that it is very hard to make a good assessment on the expected power consumption in Bulgaria in the next 30 years based on the trends from the past 10 years, but this is needed for a decision to be made on whether the country needs a second nuclear power plant.

Sitting on two chairs

Given the lack of economic arguments in favour of Belene’s restart, Borissov's sudden u-turn towards this project seems based on the desire to spend money for the sake of spending. Analysts speculate that it probably seemed politically necessary for Gerb to change its decision as Bulgaria’s state-owned National Electricity Company (NEK) has already spent over €600mn to compensate Atomstroyexport for work carried out on the project before it was cancelled. The payment was settled under Borissov's second government (he is now on his third term as prime minister) and, according to analysts, spending this sum pushed him to restart the project in order to justify this spending.

The situation with the Belene project again puts Borissov in the position of the one sitting on two chairs — he needs to justify his current decision and explain why he once again has changed his opinion completely on a major topic. At the same time, he will have to invent a good justification for his turn to Russia for his EU partners.

Analysts speculate that this dilemma could eventually force Borissov to resign for a third time, or that his government will revive the Belene project just to kill it again after a few years. However, the more Bulgaria spends on the project, the harder will be for politicians to scrap it once again, as again they will need to justify even higher costs.