Bulgaria has started negotiations with Russia to draw a 3.8 billion euro loan for the construction of the Belene nuclear power plant, Economy Minister Petar Dimitrov told Bulgarian National Radio on March 22.

Dimitrov flew to Moscow on March 20 to meet with Russian energy minister Sergey Shmatko and Sergey Kiriyenko, the head of Russia’s state-run nuclear holding company Rosatom. Upon his return, the Economy Ministry said that Belene funding was discussed during the meetings, without giving further details.

During his visit to Sofia in January 2008, Russia's then-president Vladimir Putin, now the country's prime minister, said that Moscow had put aside 3.8 billion euro in its state budget for the Belene project. Russia's Atomstroyexport was picked by Bulgaria to build the twin 1000MW reactors at Belene.

"We hoped that we would not need to use that resource, but in the current situation it would be good to find out on what terms we can get the loan," Dimitrov said.

German power conglomerate RWE, which has agreed to buy 49 per cent in the company that would build and operate the power station, had agreed to the talks, he said. In fact, it was RWE's reluctance to commit any funds for construction work in 2009 that prompted Bulgaria's Cabinet to look into the option of taking the loan, Dimitrov said.

RWE insisted that it pays any of the 1.275 billion euro that its stake would cost, only after Bulgaria finds the rest of the funds needed to build the power plant. BNP Paribas was picked by power grid operator NEK, which will own the remaining 51 per cent in Belene, to arrange the loans and was given until the end of the year to raise the money.

Analysts have said that credit crunch and the spiralling costs of construction are two other factors that will make it difficult for BNP Paribas to secure the funds, especially with the French bank unwilling to put any of its own money down for the project.

Bulgaria's contract with Russian Atomstroyexport set the construction costs at just under four billion euro, but analysts have warned that the final costs could rise to as high as seven billion euro.

Belene is meant to once again make Bulgaria the leading electricity exporter in the Balkans, a position it lost after it had to shut down four units at its Kozloduy nuclear power station before joining the European Union in 2007.