The ICC International Court of Arbitration in Geneva resolved last June that Bulgaria’s National Electricity Company (NEK EAD) had to pay 601,617,133 euros to Russia’s AtomStroyExport (ASE) for termination of the Belene project. It is less than the initially awarded amount of 620 million euros – this time the court corrected calculations errors. Until the compensation is paid in full, daily interest of 130,000 euros accrues on the outstanding amount.
In late October, Moscow and Sofia signed a settlement agreement that sets the deadline for 25 December 2016. If NEK EAD repays the total amount before 15 December, the Russian company will write off 23.8 million euros of interest accrued after the arbitration issued its award. If the awarded amount is repaid between 16 and 25 December, AtomStroyExport will cancel 55% of interest accrued. After the full repayment, NEK EAD will acquire the title to the equipment manufactured for the Belene nuclear station. By now, ASE has received an initial payment of 5 million euros.
Rosatom’s Deputy CEO for Corporate Development and International Business Kirill Komarov said during his visit to Sofia that the parties had discussed an option for Bulgaria to repay 400 million euros by the year end, with the remaining amount to be paid later. “However, it is better for both them and us to settle the debt in full,” Komarov added. “Otherwise the parties would need to establish a complex mechanism to guarantee future payments.
Kirill Komarov also spoke about Rosatom’s intention to maintain close ties with Bulgaria. “With 50 years of nuclear cooperation with Bulgaria, Russia keeps supplying all the Bulgarian reactors with nuclear fuel and has recently completed a major life extension project at Kozloduy Unit 5. Our colleagues from EDF joined the project, and we are grateful for this as joint efforts yielded excellent results. I am sure we can reproduce them at Unit 6. This is the reason why it is important to finally take the Belene issue off the table and move ahead as good partners.”
In 2006, AtomStroyExport won a contract to construct two reactors for a 2 GW nuclear station near the Bulgarian town of Belene. The project was frozen in 2009 after the government of Boyko Borisov came to power. In 2010, Russia and Bulgaria signed a memorandum of understanding and expressed their intent to establish a special purpose company that will operate the project and meet the customer’s new requirements. In particular, the parties agreed to fix the construction price and exclude public financing. The project was planned to be funded by Fortum Corporation (Funland), Altran Technologies (France), and Russian investors, with a 51% stake in the special purpose company to be held by NEK EAD. However, Bulgaria did not follow the agreements reached and pulled out of the contract again. In 2011, NEK abandoned the project, but did not terminate the agreement. ASE filed a suit in Geneva and claimed nearly 1 billion euros in compensation. Looking for a solution, the Bulgarian government voted in September 2016 to provide state backing to NEK to reimburse Rosatom for its losses.
The Belene nuclear station could have been commissioned by now. With the construction price of 6 billion US dollars being below the market average, the project could be a boon for Bulgaria, which has been purchasing power on the external market after the EU-requested decommissioning of four VVER-440 units at Kozloduy (two units in 2002 and two units in 2006).
