News 21 Sep 16

Bulgaria MPs Back Repaying Russian Nuclear Firm

Bulgarian MPs have backed a bill that allows the state budget to cover debts of over 0.6 billion euros owed by Bulgaria’s state electric company NEC to Russia’s Atomstroexport - but Brussels needs to give its approval.

Mariya Cheresheva
BIRN
Sofia
The unfinished nuclear power plant in Belene. Photo: Atomstroyexport

The law proposed by the Bulgarian government on Tuesday, was adopted on a first reading with the support of 132 out of 140 lawmakers on Wednesday.

It allows the state electric company NEC to receive state aid in the form of an interest free loan and to use it to pay off its debts to Russia’s state nuclear company Atomstroyexport.

This produced equipment for a power plant in the Bulgarian town of Belene that was never finished.

In June, the International Court of Arbitration in Geneva ordered Bulgaria to pay over half a billion euros in compensation to the Russian company.

During Wednesday’s session, the Minister of Energy, Temenuzhka Petkova, said the debt posed a “very serious risk to the financial stability of the National Electric Company and the whole energy sector”.

Earlier on Wednesday she admitted that the state has yet to decide what to do with the equipment it will acquire from Atomstroyexport after covering its debt, which accounts to around 1.2 billion leva [0.6 billion euros].

The government wants the payments made to Russia immediately as the interest rate on the debt is costing the country around 162,000 euros a day.

It remains unclear whether the government will continue seeking to sell off the Russian equipment or restart the failed nuclear plant project in order to cover its losses.

No concrete sum was mentioned in the bill because, according to the energy minister, the NEC and Atomstroyeksport need to agree first on the size and order of the payments.

“For this reason it is impossible to have a fixed sum in the draft law,” she explained.

MPs have five days to propose changes to the bill prior to its final approval at a second reading next Wednesday.

However, Bulgaria is obliged to notify the European Commission and to seek its approval for allocating state aid to NEC, according to the European competition law.

During Wednesday’s debates, Rumen Gechev, an MP from the Bulgarian Socialist Party who strongly advocated restarting the Belene nuclear project, urged Bulgaria to immediately repay its debt to Russia, without waiting for the approval of the European Commission.

But Ivan Stoynev, professor of European Competition Law in Sofia University, told BIRN that any payment made before the European Commission has given a green light would be considered illegal state aid and penalized according to the EU law.

“No payment can be made without the Commission’s approval,” he told BIRN on Wednesday, adding that the procedure could take around three months.

“The Commission fully respects the right of Bulgaria to determine its energy mix.The follow-up to the decision of the International Court of Arbitration with regard to Belene lies with the Bulgarian government”, a spokesperson from the European Commission told BIRN on Wednesday.

“At this stage, we have not yet discussed state aid issues with the Bulgarian authorities”, he added.

 

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