Natsionalna Elektricheska Kompania

This article is part of the Nuclear Spin project of Spinwatch.

Background

Bulgaria's National Electricity Company (Natsionalna Elektricheska Kompania NEK)] is 100% owned by the State. Owner rights are exercised by the Bulgarian Minister of Economy and Energy.

Until 2002 Bulgaria operated six nuclear power units at the Kozloduy site comprising four VVER-440/230 units and two VVER-1000/320 units - all manufactured and imported from the former USSR. In 2002 the two oldest VVER 440 plants - Kozloduy 1 and 2 - were closed and in December 2006 Kozloduy 3 and 4 were closed, all as a result of Bulgaria's accession to the European Union. Kozloduy is close to the Danube River border with Romania.

In 2003 NEK produced 42.5 billion kilowatt hours and exported 5 billion of these to Greece, Turkey, Serbia and Macedonia. The country sold 7.6 billion kilowatt-hours of electricity abroad in 2005, and 26.7 billion kilowatt-hours were produced for domestic consumption. However, with the closure of two older nuclear units at the end of 2006, it is unlikely that any significant surplus remains.

Belene chosen as second nuclear site

A second site was chosen near Belene, also near the Danube border with Romania. This was with a view to building four or six large units. Site clearance started in 1980 and construction of the first VVER-1000/320 unit started in 1987. This was partly built (40%, with 80% delivery of equipment) but was aborted in 1991 due to lack of funds.

In 2003 five reactor vendors expressed an interest to the Energy Ministry in completing Belene or building new units there. Early in 2005 the government approved the construction of Belene as a 2000 MWe plant. Parsons E&C Europe was appointed architect-engineer for the project to oversee redesigning and installing one incomplete V-320 reactor unit and building a new second more modern one. Two consortia submitted bids to build the plant. Both had two variants: using the old VVER-1000/320 equipment already on site, and building afresh two AES-92 units.

In October 2006 NEK chose Atomstroyexport (ASE) over a Skoda-led consortium to build the Belene nuclear power plant comprising two 1000-MWe AES-92 VVER units with third-generation reactors. Russia's ASE leads a consortium including Areva NP and Bulgarian enterprises in the EUR 4.0 billion project. Atomstroyexport and Areva NP are to build a completely new AES-92 power station, using two VVER 1000/B466 reactors. The two companies claim to be able to complete the first block in 6.5 years and the second block a year later.

Although the Atomstroyexport consortium won the tender over the Czech Skoda Alliance consortium, both Atomstroyexport and Skoda are majority owned by the Russian State and the Russian state company Gazprom, which makes it likely that the offers were coordinated.

NEK argues its choice of two completely new reactors over finishing the existing VVER 1000/320 reactors will have a higher chance of acceptance by the European Union. During an intensive information campaign preceding this decision, a coalition of Bulgarian and international NGOs had made clear to the public, interested banks, the EU and the Bulgarian government that the VVER 1000/320 would not be given an operation permit in Germany because of safety concerns. They also had pointed to the bad track record of Skoda in Temelín in the Czech Republic.

The AES-92 has not been licensed before in Europe. At present Atomstroyexport is constructing an AES-92 power plant in Kudankulam in India, where construction started in 2001 and the first block is supposed to be loaded and become critical in 2007 with the second to follow two years later. The AES-92 is presented by Atomstroyexport as a Third Generation reactor. It is a further development of the VVER 1000/320 model, fitted out with an extra strong containment with stainless steel lining and a core-catcher.

NEK will set up the Belene Project Company to manage the work. It will retain 51% interest in the project, but in May 2007 it invited investors to express an interest in taking up to 49% of the equity or proposing long-term electricity purchasing contracts. Applications were received from Swiss companies ATEL and EGL (part of the Axpo group), EDF Group, Electrabel of Belgium, Endesa of Spain, Enel of Italy, and RWE Group and Eon of Germany, CEZ of the Czech Republic, and Bulgarian copper company Kumerio Med.

Enel confirmed its interest in June 2007, as did the other companies listed. Altogether ten European energy companies are interested in investing in the project according to the Financial Times.

Budgets

The total building costs of Belene have not been made public. The almost 4 Billion Euro contract budget only represents the construction by Atomstroyexport. It does not include preparation costs, infrastructural works and an interim nuclear waste store to be built on or near the site. Although Atomstroyexport mentioned a construction time of 6.5 to 7.5 years, Bulgarian authorities like to give the impression that the first block will go on-line in 2013. Greenpeace and WISE / NIRS consultant Jan Haverkamp expects adaptations of the AES-92 to European standards, as well as the new involvement of Areva NP in the construction to lead to large delays and therefore called the estimated building time of 6.5 years highly optimistic.

The 4 Billion Euro value of the contract came as a surprise and forced Greenpeace and WISE / NIRS to adapt their comment. They first described the project as "Russian, fast and cheap", but after contract price was revealed changed this to "Russian, slow and expensive". The total cost of the nuclear power plant is likely to be more than 6 billion euros.

Belene: a financial nightmare

Financing the project appears to be a major problem for Bulgaria. After the Bulgarian government announced that NEK was going to take a 51% stake in the project, the financial broker Standard & Poor's downrated the company from "developing" to "negative". But also banks that had been alleged to be interested by Bulgaria's Economy and Energy Minister, Rumen Ovcharov, withdrew their interest after being informed by Greenpeace, WISE/NIRS and CEE Bankwatch about the risks involved. For example, Belene is in a seismically active area; the Environmental Impact Assessment has large flaws and has already been subject to court action; and it is likely that Belene, once on-line, will have to face a highly dynamic saturated market.

At the Bulgarian Government’s press conference to announce that Atomstroexport had won the contract, a group of six more banks, along with Euratom and the European Investment Bank were mentioned as sources of finance. Deutsche Bank a day later confirmed to Greenpeace that it featured falsely in that list and definitely had no interest in the project. Euratom spokes people denied that any application had been received. The other five banks, were Credit Suisse, BNP Paribas, JP Morgan Chase, Merrill Lynch & Co. and the Lehman Brothers Bank.

BNP Paribas was reported in May 2007 to be in advanced negotiations with NEK regarding a 250m euro loan. Friends of the Earth, Greenpeace, the Bulgarian coalition BeleNE! and urgewald / Banktrack met with BNP Paribas top management on 13 June to discuss its brokering role in the deal to loan NEK finance for initial project works. On June 5 environmental organisations in 14 countries protested against BNP Paribas’s plans to finance the Belene nuclear plant. Despite these protests it seems that BNP Paribas was announced as the winner of the tender to syndicate the 250 million euro loan to finance the first year of planning and construction work. The contract was expected to be signed in early June 2007. Currently fifteen, as of yet unidentified banks intend to join the loan arrangement for NEK. In an open letter the Bulgarian coalition BeleNE!, Friends of the Earth, Greenpeace and the watchdog organizations Banktrack and urgewald warned international banks against participating in the loan. According to the environment organizations, Belene is one of the worst cases of nuclear planning worldwide.

The NGO campaign against BNP Paribas has, however, already had an effect. Although the bank is determined to proceed with its loan to NEK, it says there will be no further financing of the project by BNP Paribas.

Wind resources

Bulgaria has one of the best wind resources on Central Europe. The European Bank for Reconstruction and Development concluded that the practicable renewable potential by 2012 from wind, biomass and hydro amounts to around 8GW - about two thirds of Bulgaria's current installed electricity capacity.

According to Greenpeace, Bulgaria wastes more energy than any other European country. It needs nine times more energy to produce a unit of economic output than any of the 15 Western European countries. Bringing this in line with the European average by improving the efficiency of the energy infrastructure, such as properly insulating buildings and efficient electrical appliances, would be a cheaper, faster and safer way to ensure a secure energy supply for Bulgaria than building a nuclear power station.

The dark side

Starting at the end of 2004 Albena Simeonova, a well-known environmental campaigner in Bulgaria, who founded the Bulgarian Green Party, received threats to her life due to her public opposition to the construction of a nuclear power plant at Belene.