The Russian Economic Grip on Central and Eastern Europe by Ognian Shentov

Author:Ognian Shentov [Shentov, Ognian]
Language: eng
Format: epub
ISBN: 9780367584436
Barnesnoble:
Publisher: Taylor & Francis
Published: 2020-06-30T00:00:00+00:00

Nuclear energy dominance

Russia’s influence in the energy sector in Bulgaria has been also highly entrenched in nuclear energy, which makes up around 20% of the total final primary energy consumption and around 34% of the total electricity generation in the country. All nuclear power is produced by the Soviet-built Kozloduy NPP. The latter is fully dependent on the import of reactor fuel from Russia via the Russian company, TVEL, a subsidiary of Russia’s Rosatom, and ships all of the plant’s spent fuel back to Russia for processing. The supply contract with TVEL dates back to 2002 and stipulates that the Russian company is assigned the task of taking care of the entire life cycle, from purchase to disposal, of the fuel used in the Kozloduy power plant. In 2014, BEH also started a EUR 500 million modernization project for the two existing reactors in order to extend their life span to 2049. The project is managed by a Russian–French consortium consisting of Rosenergoatom and Électricité de France.

The most ambitious effort for expanding the Russian influence in Bulgaria’s energy sector has been the restart of the Soviet-era plan for the construction of a second NPP near Belene. In 2006, the Rosatom subsidiary, Atomstroyexport, won a closely steered bid to construct two 1060-MW third-generation VVER-1000 (AES-92) reactors.33 In January 2008, the National Electricity Company signed a 4 billion euro investment contract with Atomstroyexport. Although the contract did not contain important financial information regarding cost escalation, which would have allowed the estimate of the future cost-covering price of construction, the Bulgarian government moved on with the project, and preliminary construction work on the site of the plant started in 2008. In the fall of 2009, as a new government took over amid sharply falling budget revenues and the global economic crisis, it halted construction, which marked the beginning of the unraveling of what turned out to be the biggest governance failure and Russian influence risk in Bulgaria’s energy policy thus far. An additional argument for the subsequent canceling of the project was the withdrawal of the strategic investor, the German utility RWE. Nonetheless, the Belene’s final suspension dragged on through the next five years, not least thanks to the existence of a vocal and powerful nuclear economic and political lobby in Bulgaria with close ties to Russia.

To make matters worse, and as part of the Russian strategy to exert political pressure on the Bulgarian government which had frozen the project, in 2010, Atomstroyexport revised the estimated cost of the project upwards to EUR 6.3 billion. This still represented largely overnight costs, i.e., the price that would have been paid if no interest were incurred during the construction period and the project were completed overnight. There would also be the costs of loan servicing and inflation costs, site preparation, waste management, and transmission infrastructure. According to estimates, the full cost of the plant could have risen to EUR 10.5 billion, more in line with similar projects in Turkey and Finland.34 While negotiations on the

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