Банкеръ Weekly



The Nuclear Power Plant of Kozlodoui has remitted almost BGN1BN to the Treasury within the last four years, the Energy Ministry announced during the week. In 2000 the amount was BGN124,885,000, in 2001 - BGN280,779,000, and in 2002 - BGN287,782,000. By December 31, 2003 the N-plant remitted to the budget BGN298.2MN (without the dividend due to the State), at that from the operation of generating capacities reduced by 880-megawatt (after the decomissioning of Kozlodoui's units 1 and 2). In fact, the fiscal 2003 has not been completed yet, but according to preliminary estimates this will be the N-plant's best performance within tha last three years. Kozlodoui has sold to the National Electricity Company (NEC) 15.422BN kWh of electricity for BGN745MN and expects a net profit of BGN20MN-plus. This means that at least BGN10MN will additionally enter the Treasury if the state-run companies are obliged to pay 50% of their profit as dividend, as was the case in 2003. But things will be different in 2004. Under the agreements between Kozlodoui and NEC (which is for the time being the only buyer of generated electricity), this year the N-plant will sell only 14.866BN kWh (or 4% less than in 2003), insiders calculate. In the already specified trade contacts the reduction of the production capacities is still greater - 13 per cent. Kozlodoui's units will be operating in an uneconomical regime, considerably below the nominal capacity. The coefficient of using the N-plant will be less than 60% (one of the lowest in international practice - the lowest registered levels of that indicator are 74-75%). Independent of the purchase prices of the generated electricity, which are to be specified by the State Commission for Energy Regulation (SCER), the forecasts are quite pessimistic. In addition, in the fiscal 2004 proceeds are expected to be equal to expenses or even lower than them. Thus, for the first time after its juristic seperation as an independent company the N-plant will probably register a zero financial result in 2004 or may even post a loss. Things would certainly not stand so if the agreements between Kozlodoui and NEC for 2004 were different and NE had not undertaken to use to the maximum extent the nuclear capacities installed in Kozlodoui. If NEC observed the principle of the so-called economic dispatching, they would had negotiated with the N-plant much greater quantities. Hence, the financial forecasts for both NEC and Kozlodoui would had been considerably better. NEC could export at least 1,500 megawatts (as much as the orders of foreign companies according to NEC's head Vassil Anastassov) instead of 850 megawatts (which is exports at present). Meanwhile, the second round of the tour in the N-plant of the European evaluators of the companies Arcadis and Pleyadis began during the week. Their preliminary report should be ready in end-January. However, it is already certain that the figures in it will be considerably lower than Kozlodoui's real losses from the pre-term decommissioning of the first two pairs of units (if the commitments undertaken by the Cabinet of PM Simeon Saxe-Coburg-Gotha for closing down generators 3 and 4 by the end of 2006 are fulfilled). The maximum amount that we could receive as compensation would not exceed EUR200MN, experts of the Bulgarian Energy Forum predicted in end-2003. That amount was promised by the Enlagement Commissioner Guenter Verheugen on behalf of the EU back in end-1999 in a memorandum, signed with the cabinet of former premier Ivan Kostov. That amount was in fact confirmed by the Bulgarian Parliament which ratified in march 2002 the financial agreement with the EBRD on the Kozlodoui N-plant. As of the beginning of 2007 each year the Treasury will not only be deprived of the proceeds from Kozlodoui, but will have to set aside millions of euro annually in order to ensure normal conditions for operation of the two 1,000-megawatt units and guarantee the N-plant's safety.Additionally, money should be found for the pre-term decommissioning of Kozlodoui'd units 3 and 4 (at least EUR450-500MN). This huge amount won't be necessary immediately after 2006. The money would be needed for a period of about 30 years. But in 2007-2009 at least EUR64MN should be provided or nobody could ensure the safety of the decommissioned blocks. One of the big problems after 2006 will be the BGN80MN, that should be paid each year under the loans for modernization of units 5 and 6. The financial institutions, crediting the reconstruction of the two units are different. Euroatom (a fund of the European Commission, managed by the EBRD) will extend EUR212.5MN to finance the activities to be performed by Framatom (the French-German corporate association, including the German giant Siemens and the French national nuclear operator). The American Citibank will allocate USD72.4MN for finance the work of the US company Westinghouse. Another USD80MN will come from the Moscow-based ROSSEXIMBANK. The money will finance the activities of the Russian state-run companies Atomenergoexport. Each of the credit agreements, however, project state guarantees and NEC is a part under the agreement as well. Thus, if Kozlodoui goes bankrupt after 2006 the installments under the loans should be paid by NEC (and the Bulgarian State). Concurrently, money should be set aside for the safety of Kozlodoui's units 1 and 2, closed in the end of 2002, hundred millions of ero should be invested in storehouses for radioactive waste and exhaused nuclear fuel. According to experts' estimates, at least USD400-800MN will be necessary in order to bury the present more than 1,100 tons of heavy metals from worked out fuel. Money will be also necessary for the supply of fresh and transportation of exhausted nuclear fuel, for repairs, wages and insurance payments, as well as for the 20% deductions to the funds for taking out of exploitation and storage of radioactive waste. Annual needs will exceed several time the proceeds from the sale of electricity, generated by the 1,000-megawatt units 5 and 6 (even if they operate at 100% of capacity), and even if the contracts for the purchase of electricity from the N-plant are closed at the highest prices not only in Bulgaria, but also in the entire region.Then the only way out will be the Treasury, that is the Bulgarian tax-payer.

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