site.btaCabinet Approves Bill on Payment for Belene N-Plant Reactors with State Aid

Cabinet Approves Bill on Payment for Belene N-Plant Reactors with State Aid

Sofia, September 20 (BTA) - Bulgaria's Government Tuesday approved draft legislation under which State aid will be extended to the National Electric Company (NEK) to pay a sum awarded against it by the International Court of Arbitration in Geneva for two reactors built by Russia's AtomStroyExport for the Belene N-Plant.

The amount of principal and interest payable to date adds up to 628,957,596 euro. Unless the payment is paid now, the amount will reach 646,230,132 euro by the end of the year, Energy Minister Temenouzhka Petkova said, specifying that interest of 324,000 leva daily is accruing on this outstanding obligation.

"Bulgaria challenges the amount of interest, now that a technical mistake has been detected in the way the rate was calculated. In the opinion of the Bulgarian side, the amount of interest should be smaller," Petkova added. The court of arbitration, though, has yet to pronounce on this claim.

Apart from the debt snowballing, there is also a risk of AtomStroyExport filing for NEK's bankruptcy. This will mean that the obligations incurred by the Bulgarian Energy Holding under two bond issues in 2013 and 2016 will become due ahead of maturity. Yet another risk is AtomStroyExport laying a claim against the Bulgarian State unless NEK pays up, the Energy Minister said.

Petkova recalled that AtomStroyExport has already stated adamantly that some payment, even a partial one, should be made on the arbitral award. "This will enable us to hold subsequent talks on reaching certain accommodations," she explained. At the end of last week, it transpired that the Bulgarian Government had decided to pay Russia 400 million euro until the end of 2014, which is the bulk of the amount due for the equipment manufactured, as fixed by the arbitral award.

At the Cabinet meeting, Finance Minister Vladislav Goranov said that, under the proposed mechanism, the aid will be subject to repayment. He hopes that NEK and the Energy Ministry will manage the process of settling relations with the Russian side in a way to ensure a certain return on these assets, and a large amount of this sum will be returned to where it came from, as approved by the National Assembly. "Bulgaria is not paying a fine or a sanction, it is paying for a manufactured product, which is an asset and is probably worth at least the sum awarded," Goranov said.

Prime Minister Borissov expressed the hope that Parliament will pass the bill promptly.