26 Oct (NucNet): Bulgaria’s state-owned National Electric Company (NEK) and Russia’s nuclear equipment manufacturer Atomstroyexport (ASE) have signed an agreement which finalises compensation awarded to ASE for the cancellation of the Belene nuclear project in 2012.
In a statement on its website today, Bulgaria’s energy ministry said the amount of compensation has been decreased by about €20m ($21m) due to “errors made during calculation”. The final sum to be paid by NEK will be slightly above €600m.
According to the statement, the two parties have agreed to settle the claim before 25 December 2016.
Under the agreement, ASE will forego €23m of interest accumulated after the original arbitration decision, made by the Geneva-based International Court of Arbitration (ICA) in June 2016, if NEK pays in full before 15 December. The arbitration decision bound NEK to pay €167,000 in interest every day until the compensation claim is settled in full.
The ministry said ASE has agreed to give up 55% of the accumulated interest if NEK settles the claim between 16 and 25 December.
On signing the final agreement NEK paid an initial €5m, which will be deducted from the outstanding principal amount.
In June 2016, the ICA ordered NEK to pay €620m to ASE, or about half of its original €1.2bn compensation claim, for components which had already been manufactured before the cancellation of the Belene project in 2012.
Under the ICA’s ruling, Bulgaria will assume ownership of the equipment, currently being stored at a manufacturing plant in Russia. On 5 December 2016 a Bulgarian delegation will inspect the equipment.
A nuclear station at Belene was initially planned by Bulgaria’s communist government in the 1980s, but was stopped in the early 1990s because of environmental and financial concerns.
In January 2008 the project was formally revived when ASE and NEK signed a contract for the design, construction and commissioning of two Russian-designed VVER-1000 pressurised water reactor (PWR) units at the site.
However, in 2010 the project was suspended and in 2012 the Bulgarian parliament formally abandoned it because of uncertainties about its financial viability. Since 2011, ASE has been asking Bulgaria to pay compensation for breach of contract.
On 28 September 2016, the Bulgarian parliament passed a bill authorising the government to release a loan to NEK to cover the compensation owed to ASE
EU regulations on state aid required Bulgaria to request formal approval for the loan from the European Commission and official sources have said a decision is expected within two months.
Bulgaria’s energy ministry said that after the compensation payment is settled, NEK will have fulfilled all legal requirements under the ICA’s arbitration decision, but will still have to pay ASE for expenses related to storing and maintaining the reactor equipment NEK will acquire.
