Sun, May 19 2013
Bulgaria is preparing to decommission two more reactors of its first and, for now, only nuclear power plant in Kozloduy, north-western Bulgaria, by the end of 2006 as one of the commitments related to the country's European Union accession. It appears that few people on the list of this country's top officials have a clue as to what will happen to the domestic supply of electricity, the exports and the price of power after the closure. And, given what has come to their knowledge, it does not look so bright.
Bulgaria's electricity exports will drop in 2007 following the closure of reactors 3 and 4 at Kozloduy nuclear power plant (NPP). This means the country will have to wait for the completion of a second nuclear power plant, expected in 2012, to help cover up to 60 per cent of South East Europe's electricity imports.
Mardik Papazyan, executive director of the National Electric Company (NEC), the state-owned electricity supplier and power grid operator, announced this on June 13.
"The scenarios for next year envisage exports of between 200 million and 1.5 billion kWh of electricity," Papazyan told a news conference during an energy forum in the Black Sea city of Varna.
Bulgaria, which hopes to join the EU in 2007, bowed to pressure from the union and already closed two of its four 440MW Soviet-era reactors in Kozloduy in 2002. The country has also pledged to close the second pair of units at the end of 2006 over safety concerns voiced by the EU.
Kozloduy generates about 40 per cent of Bulgaria's electricity output. The country is the leading power exporter in South East Europe and covers 80 per cent of the rising power deficits of its neighbouring states.
Bulgaria exported about 3.9 billion kWh of electricity through June 11 this year, up 12 per cent year-on-year, Papazyan said.
"If that pace of exports is maintained, by the end of this year we will reach last year's level of exports," he said.
An NEC official said last month that Bulgaria planned to export about seven billion kWh of electricity this year, nearly attaining the record-high exports of 2005.
Closing the second pair of 440MW reactors at Kozloduy, however, will almost completely limit Bulgaria's power exports capacity until 2010 or 2011, when a new 670MW coal-fired power plant (Maritsa Iztok 1) being built by the US company AES will go online, Papazyan said.
To bridge the gap in the meantime, Bulgaria will also rely on a hydropower plant, Tsankov Kamuk, and a gas-fired power plant in Sofia, to secure a combined output capacity of 210MW.
In addition to the 440MW reactors, Kozloduy, located on the Danube River, has two more modern reactors of 1000MW each.
If one of the two remaining units of Kozloduy stops work, electricity could be imported from Romania and Serbia, Papazyan said.
According to him, the period until 2011, when units of Maritsa Iztok 1 will start operating, will be strenuous for Bulgaria's energy system not only because of the closure of the Kozloduy NPP units, but also because of growing electric power consumption.
Since the beginning of the year, electric power consumption has grown by 4.3 per cent. The problem of growing internal electric power consumption and the deficit in electric power in the region will be solved only with the completion and launch of the second nuclear power plant at Belene (also on the Danube), Papazyan said.
Papazyan declined to project the growth in electricity prices as a result of the closure of Kozloduy units 3 and 4 at the end of this year and said that this should be calculated by the State Energy and Water Regulatory Commission (SEWRC).
The chair of the parliamentary committee on energy, Ramadan Atalai, said that the increase would not be high and would be within the movement of fuel and electric power prices in the EU.
SEWRC chair Konstantin Shoushoulov was more specific. The total production price of electric power may rise by less than 10 per cent after the decommissioning of the two reactors of Kozloduy, he said.
In the beginning of September, SEWRC will have an open meeting at which it will consider the offers of electricity distribution companies for the price of electric power. Prices will be raised as of October 1.
Shoushoulov also said that the market for all end users would be opened entirely after January 1 2007, and for household users this date is July 1 the same year.
The Belene alternative
Bulgaria is now investing its hopes to remain a leading power exporter in South East Europe in the construction of a 2000MW nuclear power plant at Belene.
"Without Belene, we cannot guarantee that Bulgaria will not need to import electricity after 2013-2015," Papazyan said.
He added that Bulgaria's electricity consumption would grow faster than the previous NEC projections for a three per cent annual rise until 2020. NEC said earlier it sold 26.8 billion kWh of electricity inside Bulgaria in 2005, up 2.7 per cent from 2004.
"If now Bulgaria covers over 80 per cent of the electricity deficit in the region, that deficit will grow to between 12 billion and 14 billion kWh within the next few years. With Belene, we will be able to cover up to 60 per cent of that deficit," said Papazyan.
Two months ago, NEC started face-to-face talks with two bidders vying to build the Belene plant. They are a consortium of Czech CEZ's engineering unit Skoda Praha and three banks, and a group of the Russian engineering company AtomStroyExport with the French-German Framatome.
"By the end of this month we will be able to start financial negotiations," said Papazyan.
The power plant in Belene could be built in six years' time, if all goes well, he added.
While on a visit to Russia on June 15, Economy and Energy Minister Roumen Ovcharov said that the main contractor for Belene would be selected by the end of July or in early August.
NEC has not yet shown any sign of whose bid - the AtomStroyExport or the Skoda Alliance - it prefers. However, according to analysts, frequent visits by Ovcharov to Russia have raised concerns that the tender may be biased or tied to Russian interests in other energy sectors.
Russia's state-owned gas giant Gazprom is backing the bid of AtomStroyExport and is running parallel talks on the price of its natural gas supplies to Bulgaria. The Russians are thus expected to trade their gas price demands for preferential treatment in the Belene nuclear tender.
Ovcharov has been recently quoted as saying that the Russian bid for Belene holds very good chances to win.
The Maritsa Iztok alternative
While the Belene launch looks far away, the project for Maritsa Iztok 1 coal-fired thermal power plant is somewhat closer. In early June, Ovcharov and AES president and chief executive officer Paul Hanrahan broke the ground of the new plant.
The project is the single largest foreign investment to date in Bulgaria and one of the largest green field investments in South East Europe.
The new Maritsa Iztok 1 plant, located near the town of Gulubovo (south-eastern Bulgaria), will be the first large-scale power plant to be built in this country in more than 20 years. Upon completion, the base load facility will serve as a source of electricity for Bulgaria and South East Europe.
It is supported by a 15-year power purchase agreement with NEC, and a 15-year lignite supply agreement with the state-owned mining company, Maritsa Iztok Mines.
The plant will be constructed under the terms of a turnkey contract with ALSTOM and is expected to begin operations in 2009. French company ALSTOM will use its clean combustion technologies and provide the two pulverised coal boilers of 335MW each, two steam turbines, two generators and the balance of the plant.
Nearly 12 per cent of the investment is in the new facility's desulphurisation plants.
But, reaching the first turn of the shovel was not an easy thing. It came after more than eight years of delay.
"The project had a long history, but all hindrances have already been overcome," said Peter Lithgow, the new executive responsible for the implementation of the AES Maritsa Iztok 1 project.
"There is much work to be done, but Bulgaria will have a powerful station, complying to all environmental requirements," he said, adding he hoped for fair co-operation with the local and central government in the construction of the new capacity.
"The availability of own energy resources renders the implementation of that project independent of the expensive imported inputs," said Hanrahan.
The 1.4 billion euro investment is the biggest US green field investment in Bulgaria and indicates the trust in the country's economic progress.
The first unit should be ready within 36 months and be commissioned in 2009 under the ALSTOM contract terms. Six months later, the second unit should also be put into operation.
Actual work for the project's implementation starts in July. A consortium between a Turkish and a Bulgarian company has been chosen as a sub-contractor.
In the construction period, the project will open 2000 jobs, and in peak moments up to 3000 people will be working at the site near Gulubovo.
And another Maritsa Iztok alternative
The past week brought news of another commitment to the Maritsa Iztok site, only this time related to the thermal power plant Maritsa Iztok 3.
Italy's Enel is considering investing more than 500 million euro to add a 900MW unit to its 840MW Bulgarian power plant Maritsa Iztok 3, a spokesperson for the company said on June 15.
"Enel is considering the option to expand the Maritsa Iztok 3 power plant," Lilia Nikolova, a spokesperson for Enel in Bulgaria, said, verifying comments by Enel's chief executive Fulvio Conti in an interview with the Bulgarian daily Trud.
Conti told Trud that Enel had offered Bulgarian authorities a public-private partnership for the new facility.
Enel and US power utility Entergy have a 60/40 joint venture. The deal was signed in 2003 with Bulgaria to modernise the existing power production units at the coal-fired Maritsa Iztok 3 and extend their operational life by 15 years.
The joint venture owns 73 per cent of Maritsa Iztok 3 and the rest is held by NEC.
As sometimes developments happen fast, on June 16, Enel said it would increase its stake in Maritsa Iztok 3.
The company will pay 47.5 million euro for the 40 per cent stake of the US Entergy. This way Enel becomes the sole owner of 73 per cent of Maritsa Iztok 3 power company, which owns the Maritsa Iztok 3 power plant.
It might not look as one yet, but the battle for Bulgaria's energy producing and exporting future might have already started. Whether it will be Belene, or Maritsa Iztok with its earlier horizon, whoever owns and operates it will have the opportunity to trade electricity in all South East Europe. That is, if this future "owner" first manages to overcome the power hunger that will follow the closure of Kozloduy reactors 3 and 4.
The option to postpone the due date was contingent on securing 55 million euro for immediate repayment of the amounts loaned by Belgium's Dexia and Japanese bank Mizuho.
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Citing three separate sources familiar with the deal, Capital Daily reports that the creditors found offers submitted by three bidders unsatisfactory.
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