Economy Minister pessimistic on Belene nuclear power plant funding

Even Bulgaria's ever optimistic Economy and Energy Minister Petar Dimitrov has had to concede that the country's plans to build a second nuclear power plant at Belene on the Danube River face an uphill struggle to secure financing for construction to begin.

In an interview with private broadcaster Nova TV, quoted by Dnevnik daily on July 7, Dimitrov has said that funding "could not be secured", without going into details. Still, Bulgaria had one avenue left, he said: "There are some candidates, but the most visible one is Vladimir Putin".

Russia's prime minister, during his last visit to Bulgaria in January 2008, when he was still president, said that Russia had earmarked 3.8 billion euro in its budget for the construction of the Belene nuclear power plant, should Bulgaria fail to secure funding any other way.

Dimitrov's admission comes only days after London-based Infrastructure Journal reported that BNP Paribas, the French banking group picked to arrange financing for the future nuclear power plant, has decided not to commit any of its own funds to the project.

Bankers quoted by the journal said that it was unusual for a bank picked to structure finance for such a big project not to make a contribution, and that it sent a message of caution to other prospective financial institutions.

With the costs of the project rising because of higher commodity prices and financial markets still in the throes of the global credit crunch, as well as strong opposition in Bulgaria from environmental activists, banks could be reluctant toget involved.

Bulgaria has signed a deal with Russia's Atomstroyexport to build the power plant for a fixed price of just under four billion euro, but that does not include additional costs on related infrastructure, which were expected to put the total investment in Belene around seven billion. That figure is now thought to be closer to nine billion euro, analysts have warned, including the former head of Bulgaria's first nuclear power plant at Kozloduy, Gueorgui Kastchiev, now teaches at Vienna University's department of risk research.

Despite rising worries about the future of the project, Dimitrov maintains, as quoted by Dnevnik, his point of view that private banks have to bear the brunt of the risk, the Government doing its part by committing 600 million euro in state guarantees for future loans that would be contracted from the European Union's Euratom nuclear agency and the European Investment Bank.

(Source: Sophia Echo)