Nuclear Plants Debated as Energy Links Strengthen

Economic News

22 Jul 2010
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With the recent announcement that Bulgaria expected to close the environment chapter of its accession negotiations with the European Union, the country edged closer still towards eventual EU membership. Meanwhile though, an old environmental issue appeared to resurface in the shape of the Kozlodui nuclear plant, with the announcement that the company maintaining it had been sold off. The issue highlighted Bulgaria's ongoing debate on nuclear power, and its role as a regional energy conduit.

Kozlodui was being maintained by Atomenergoremont, with the Privatisation Agency (PA) announcing June 27 that a 70% stake in the company was being sold to a consortium consisting of the Bulgarian Energy Company (BEC) and Laser and Optical Technologies. Rival bids from the Balkan Energy Fund, Interatomenergo and Cobella were dismissed. The company's price was 15.63m leva (USD9.1m). Last year, Atomenergoremont's post-tax profit stood at 600 000 leva (USD352 000).

Now, the BEC consortium must wait for the National Security Service to run a check, since the nuclear plant has strategic significance. Provided it passes this test - and many Bulgarian papers had run stories alleging that BEC had some dubious business connections, all roundly denied - then it will also then have to prove competence in carrying out maintenance of the plant.

It will also now have to face off a challenge from the Supreme Administrative Prosecutor's Office, which demanded on July 7 a court ruling cancelling the privatisation. A statement from the office said that it considered the deal to be "infringing laws related to the national security and nuclear safety".

At the end of June, the issue of the sale had also been discussed in Vienna at an international conference organised by the International Nuclear Energy Agency. Austria has been outspoken in its criticism of the plant, with Vienna taking a leading role in EU efforts to get the Bulgarian government to shut down two of the plant's four functioning units, which it claims are unsafe.

Bulgaria had agreed to the closure of two other aged, Soviet made 440MW units at the plant last year and in May agreed to shut down the two other questionable units by 2006. However, the constitutional court had annulled the government's decision on this as it ran counter to a parliamentary motion banning any reactor closures ahead of Bulgaria's joining the EU.

The issue has also brought back onto the agenda the argument in favour of Bulgaria opening a new nuclear power plant.

"Bulgaria's energy system will need a new nuclear facility in 2009," Bulgarian National Electricity Company executive director Vasil Anastasov told journalists June 26. "If units three and four of the Kozlodui nuclear power plant are closed in 2006 and if electricity consumption increases by at least 1.5% per year from 2005 till 2010."

While persuading the Bulgarians to shut the two dubious units of its Kozlodui plant, the EU had also proposed an alternative, new nuclear plant be built near the Danube port of Belene, yet this project had been mothballed thanks to environmental protests.

However, the government decided last December to resume the project. Some USD1.3bn had already been invested to build the fundament of the plant and supply a 1,000MW Czech-made reactor. Completion of the facility would cost a further USD1bn and would take about five years, according to government estimates.

Back in April, several international companies approached the government with plans for finishing off the second plant, including Russia's Atomstroyexport, the US Westinghouse, France's Framatom, the Czech Republic's Skoda and Atomic Energy of Canada.

Environmental concerns aside, the plant would make a sizeable contribution to Bulgaria's electricity generating capacity. However, the country is already a major player in the regional electricity market, as Energy Minister Milko Kovachev pointed out to reporters June 27 at a forum on the southeast European gas sector in Sofia, organised by the Adam Smith Institute.

Kovachev said that Bulgaria supplied electricity sufficient to cover about 50% of the regional deficit, adding that this was evidence of the stabilising role the Bulgarian energy sector played.

He then said that the development of a genuinely free energy market in Bulgaria would start by the end of the year, with the first direct contracts being signed around then between large electricity consumers and generating utilities. Two new 400KV power lines connecting Bulgaria to Greece and Macedonia were also put forward as key factors in the development of the regional energy infrastructure.

Moving on to natural gas, Kovachev also said that some 60% of all the gas consumed in Turkey came via Bulgaria, as did 100% of that consumed in Greece and Macedonia - further underlining the country's importance as an energy distribution point.

Yet with environmental concerns by no means over in terms of the country's nuclear plants - both actual and projected - the government may have to tread carefully if it is to make this strategic importance pay in dollars and cents, rather than in protests and disputes.

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