Construction of a new thermal power plant in the Maritsa East One complex will start in May 2002, Richard Mardon, managing director of the project and representative of the principal shareholder, Applied Energy Services (AES), announced last Thursday during the Southeast Europe Economic Forum (SEEF).

The new 670-megawatt plant in the Maritsa East lignite coal basin will replace an old unit and will use only domestic raw material. The initial agreement between the Bulgarian National Electricity Company (NEC) and AES, signed in June, provided only for the installation of two new power units with a total 600-megawatt capacity by the end of 2003, but new plant construction was not planned.

The construction works only amount to $650 million and the total cost of the project will be $850 million, of which AES will invest $225 million of its own capital. The remaining $625 million will be supplied by the European Bank for Reconstruction and Development (EBRD), U.S.-based Overseas Private Investment Corporation (OPIC) and the German Kredit fur Wiederaufbau (KfW), an AES statement from Thursday said.

According to a Reuters report, KfW was expected to contribute the larger part of those credits but no breakdown was available. Representatives of the three lending institutions will visit Bulgaria by the end of this year.

AES will sign the contract for supply and construction with Alstrom within three to four weeks. Bulgarian companies will be given the opportunity to sign contracts worth some 200 million leva during the plant's construction, the statement said. In June, NEC, AES and Maritsa East coalmines arranged a deal for lignite supplies and power purchases.

The new plant is expected to improve Bulgaria's energy output, create new jobs and strengthen the country's role as an energy leader in southeast Europe, Reuters reported.

It would also help Bulgaria avoid an energy crisis because some 40 per cent of the country's power producing capacity would be in process of decommissioning or refurbishment by 2010, said the statement.

AES is a major investor in the Bulgarian energy sector. The company has interests in 173 facilities totaling over 59,000 megawatts of capacity in 27 countries. AES also distributes electricity in nine countries through 19 distribution businesses. It holds an 88-per cent share of the Maritsa East One project.