$6Bln Contract on Putin's Bulgaria Trip

APA street vendor showing nesting dolls of Putin and U.S. President George W. Bush at a market in Sofia on Monday.
SOFIA, Bulgaria -- Bulgaria and Russia will sign a nearly 4 billion euro ($5.95 billion) contract this week to build a nuclear plant in northern Bulgaria, a Bulgarian official said Tuesday.

Economy and Energy Minister Peter Dimitrov said construction of the plant at Belene, some 250 kilometers northeast of Sofia, would start in the second half of this year. He said the two 1,000-megawatt reactors were expected to come into operation by 2014.

The Belene project is considered an important test as other central and East European countries consider plans to build new nuclear plants or to rebuild old ones from the Communist era.

The 3.99 billion euro deal will be signed Friday with officials from Russia's Atomstroiexport, during a visit to Sofia by President Vladimir Putin, Dimitrov said.

Atomstroiexport will be the main contractor, with France's Areva and Germany's Siemens as primary subcontractors.

Bulgaria already operates a nuclear plant at Kozlodui, two of whose aging Russian reactors were closed down in 2006 because of security concerns. Malfunctions at the remaining two units have prompted emergency shutdowns twice in the past six months, but no radioactivity is said to have leaked.

Belene Enterprise CEO Yordan Georgiev said Belene would be "the best European project in terms of safety."

Compared to the VVER 1000 Russian reactors at Kozlodui, the two AES92 reactors in Belene will include advanced safety systems and comply with EU standards.

Estimates by Bulgaria's state-owned NEK electricity company put the cost of the electricity to be generated by the new plant at 0.036 to 0.037 euros per kilowatt-hour.

"The opportunity to generate cheap electricity is in accordance with Bulgaria's economic interests," Dimitrov said. "The electricity deficit in the region is expected to reach 50 percent in coming years.

"It is in Bulgaria's interests to ensure that the region has enough electricity and develops well economically," he said.

NEK is selling up to a 49 percent stake in the Belene Power Company, which will own and operate the facility. NEK is expected to select shortly a strategic investor among five short-listed companies -- Belgium's Electrabel, Italy's Enel, E.On and RWE from Germany, and CEZ from the Czech Republic.

Bulgaria's government invested more than $1 billion in Belene, but froze the project in 1990 after environmentalists said it could pose a safety risk.

The project was revived to compensate for the closure of the two units at Kozlodui, which Bulgaria agreed to shut ahead of its entry into the European Union last year.