Tatyana Valeva
Institute of International Economic and Political Studies, Russian Academy of Sciences

The state company Kozloduy nuclear power plant

R

ecently St. Petersburg hosted the 8th session of the Russian-Bulgarian bilateral commission on economic, scientific and technical cooperation. Among its participants was Bulgaria’s minister of energy Milko Kovachev. Special attention at the session was paid to prospects of developing the Bulgarian nuclear power energy. Today the future of this industry much depends on European officials and regulations: as is known, Bulgaria is getting ready to join the European Union. However, Russia is also influencing the Bulgarian energy policy and possibilities of the effective cooperation between the two countries are still available.
The close ties between Russia and Bulgaria in nuclear power date as far back as 1970s, when the project of building the Kozloduy nuclear power plant (NPP), the first and so far the only one in Bulgaria, was initiated within the Council for Mutual Economic Assistance (COMECON). The basic equipment was provided by the USSR, Czechoslovakia and Hungary. There were three construction stages of implementing the project. At the first stage two reactors with the capacity of 440 MW each (at that time they were reactors of the most advanced type among those with the similar capacity) were installed. Later they were supplemented with two more reactors of the same type and, finally, block 5 and block 6 with the capacity of 1,000 MW each were constructed. For the most part design and construction works at the NPP were provided without compensation by the Soviet Union. That is why the period of its recoupment was very brief. Enriched nuclear fuel was shipped from Russia, which also took care of nuclear waste.
Having its own nuclear power industry was extremely important for this Balkan country with poor energy resources. Kozloduy accounted for 40% to 47 % of all Bulgarian electric power and this allowed tariffs for consumers to be relatively low. The depletion of resources at the first two blocks was expected either in 2005 or 2006. The next two small reactors should have exhausted theirs some time between 2010 and 2012.
In 1987 construction works were started on the second NPP Belene. The plans called for commissioning the first reactor with the capacity of 1,000 MW in 1993 and, further on, for putting in operation one reactor every two years so as to bring the total capacity of the NPP up to 4 million kW. To this end the infrastructure was specially built: the railway service, the berth on Danube for unloading equipment, the Balkans-largest concrete-mixing plant. All this permitted to assemble on a high level the first block of the NPP and to prepare a site for the second one.
However, in the middle of 1991 construction works on the NPP were stopped. By then volumes of investments, which were already made, exceeded $1B. And now, for 12 years already, the National energy company has been allocating $3M a year just to maintain the site of the NPP in a proper state. There are 200 workers constantly employed there.
All these years debates about the future of the Belene NPP have never stopped. First, it was considered Bulgaria’s own internal problem. Opponents of continuing the construction insisted that the country’s consumption of electric power went down sharply and that there was no need for the new major power facilities. Construction advocates, on the contrary, justly noted that the time was not far off, when the first blocks of Kozloduy exhausted their resources and there would be nothing to replace them with. At the same time they also realized: Bulgaria could not ensure construction of the new NPP on its own.
As Bulgaria is entering the orbit of the EU, the prospects of developing its nuclear power industry, including the fate of Belene, are being discussed now not only in Sophia. In 1999 Bulgaria and the EU signed the preliminary memorandum, under which the first two blocks of the Kozloduy NPP were shut down at the end of 2002 and the third and the fourth blocks should be put out of operation in 2006 at the latest. This step of Ivan Kostov’s center-right government was dictated by the position of European bureaucrats, who claimed that it would be impossible to observe nuclear safety requirements at the morally outdated facilities.
In reality, the problem of reliability of Kozloduy’s operation looks somewhat different. By the end of 2002 the first two blocks did not exhaust their resources yet. But the demand to shut them down has, at least, one reason: these blocks have not undergone any significant repairs since their start-up in 1974. As far as the third and the fourth blocks are concerned, they have been radically modernized with a fundamentally new system installed. By estimates of international experts, these blocks have met all the necessary requirements of safe operation. Taking this into account, the state company Kozloduy NPP initiated in the spring of 2002 the procedure of transferring them into another category.

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Council for Mutual Economic Assistance COMECON, international organization active between 1956 and 1991 for the coordination of economic policy among certain nations then under Communist domination, including Albania (which did not participate after 1961), Bulgaria, Cuba, Czechoslovakia, East Germany, Hungary, Mongolia, Poland, Romania, and the Soviet Union. Yugoslavia participated in matters of mutual interest. Although it was formed in 1949, a formal charter was not ratified until 1959. The charter gave COMECON the same international status as the European Economic Community (Common Market), but the structure was controlled by heads of state. COMECON undertook large-scale measures for organization of industrial production and coordination of economic development through a series of five-year plans (1956-85), but, despite attempts at integration, most trade was strictly bilateral; planned economies had limited mechanisms for transferring trade surpluses or deficits to third world countries. After increasing 400% for its first 15 years, trade among COMECON countries declined. Briefly a coordinating body only (Jan.-June, 1991), it was disbanded in June, when democratization, the collapse of trade and conversion to hard currencies rendered it redundant.

In our view, the demand of EU officials to shut these reactors down ahead of schedule has a political rather than economic or ecological reason. First, it is important for the EU to observe regulations that prohibit energy systems of its member countries to be closely associated with any other country outside the Union. In this case it is Russia, from which Bulgaria gets 100 % of natural gas as well as from 60% to 70 % of oil and all enriched uranium for its nuclear power plants. Second, it is expected that by getting rid of almost the half of its nuclear power capacities Bulgaria will "set an example" for Lithuania and Slovakia, which are facing the same problems.
Meanwhile, Bulgaria finds itself perhaps in the worst position among all countries that want to join the EU. To begin with, in contrast to 10 other candidates, Bulgaria like Romania will not be admitted to the EU in 2004. Nonetheless, Bulgaria is required to take the most drastic measures for putting its energy complex in compliance with "European standards". As a result of taking Kozloduy’s four blocks out of service, the country’s national production of electric power will decrease 24% and at the same time its cost for consumers will go up by 40%. What is more, Bulgaria should satisfy the requirement of the European commission and modernize the fifth and the sixth blocks. This will cause a suspension of electric power supplies from the NPP. There will be nothing to make up for the shortage of power. There are no plans to construct substituting capacities, for example, at the frozen Belene NPP or at electric power stations that use standard fuel.
Nevertheless, in this situation the government of Simeon Saxkoburggotsky (as the former Royal pretender and now Prime Minister, Simeon Saxe-Coburg-Gotha, is known in Bulgaria), which set the strategic goal of joining the EU, demonstrates a discreet position on the question of shutting down the third and the fourth blocks at Kozloduy.
In any case the Russian side retains the market in Bulgaria’s nuclear power industry. There seems to be two most realistic directions: modernization works at the fifth and the sixth blocks of Kozloduy and participation in implementation of the second phase at the Belene NPP, if, of course, the Bulgarian leadership takes an appropriate decision.
Until recently Russia was not allowed to make privatization deals on Bulgaria’s territory (the exemption is LUKOIL that managed to buy the controlling block of Neftohim’s shares. Russian companies also did not take part in reconstructing industrial facilities built with the financial and technical assistance of the USSR. When in 1998 there was an international tender for reconstructing block 5 and block 6 at Kozloduy, Russia’s Atomenergoexport had to join the Kozloduy European consortium along with Germany’s Siemens, Framatom of France and Bulgarian NEC. There was no other way to take part in this project. However, at the beginning of 2002 an international tender for modernizing turbine condensers at the same blocks was won by the Leningradsky metallichesky zavod incorporated in the Russian concern Sylovye mashiny. Work will start this year and the cost will amount to $15M.
Much larger investments are needed to continue construction works at Belene: just the first block requires $1.2 billion. Russia was ready to provide a $500M credit and join an international consortium on condition that it would supply equipment as well as enriched uranium. The Bulgarian side declined the offer.

FOR THE RECORD:
	Early in March there was a three-day state visit to Bulgaria by Russia’s president Vladimir Putin. The visit was timed to celebrating the 125th anniversary of liberating Bulgaria from the Osman yoke during the Russian-Turkish war that lasted from 1877 to 1878. It was the first visit of the Russian leader to Bulgaria in the last 10 years. As a result of the negotiations, both sides signed the joint declaration of deepening the friendly relations and the memorandum on long-term cooperation in energy as well as a number of trade and investment agreements. They also concluded agreements on gas transit to Turkey via the Bulgarian territory and construction of new gas pipelines to Greece, Serbia and Cyprus. The Russian side expressed its readiness to participate in privatizing some Bulgarian enterprises, particularly the gas distribution network.

Belene’s director Petr Simeonov stressed many times that construction works could be financed through attracting both Western and Russian investors. But the problem has a political nature. The Bulgarian leadership can take such a decision only after coordinating this question with functionaries of the EU in the context of chapter Energy that is now being discussed (this chapter is part of the package of 28 ‘membership’ documents for countries, which are candidates to the EU).
Due to the necessity of adapting Bulgaria’s energy complex to the European standards, a new Law on energy is being worked out now. Also, the question of constructing Belene should be settled. There are discussions underway concerning four options of reactor types for the future NPP, including the Russian "millionniy", which might be fitted out with Western equipment.