Банкеръ Weekly

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CONSTRUCTION OF MARITSA IZTOK 1 TO COST EUR1.4BN

After more than an eight-year delay the citizens of Gulabovo lived to see the beginning of construction of a new electricity production capacity on the site of Maritsa Iztok 1 thermoelectric power plant (TPP). On Tuesday (June 6) the Minister of Economy and Energy Roumen Ovcharov, the US Ambassador to Bulgaria, H. E. John Beyrle, and a group of managers from the American company AES turned the first sod of the AES Maritsa Iztok 1 project. The ceremony was quite pompous, accompanied by solemn speeches and rosy promises. The only thing which perhaps distinguished it from that first sod of the Gorna Arda cascade was the lack of ... barbecue. Near Gulabovo it was said that the new power station would be the biggest American investment not only in our country but also on the Central and East European market. After completion of its construction that will take three years for the first unit and another six months for the second one, the new capacity will guarantee Bulgaria's leading role on the electricity energy market in the region.
Bulgaria marks a considerable economic growth and this project will help to sustain it. Energy security is being guaranteed by it. The availability of own energy resources renders the implementation of that project independent of the expensive imported inputs, said Paul Hanrahan, President and CEO of AES. In his words, the new TPP will be in compliance with the Bulgarian and European environmental requirements and the harmful emissions will meet EU standards. The EUR1.4BN investment is the biggest US greenfield investment in Bulgaria and indicates the trust in the country's economic progress.
This is the biggest American investment so far, H. E. John Beyrle said. American investors are paving the way for investments, showing that Bulgaria is an appropriate place for them. As a NATO member and having well-qualified experts, we have made a commitment to assist the progress of Bulgarian economy, the US Ambassador concluded. AES Maritsa Iztok 1 TPP is a symbol of Bulgaria's future development and its becoming an energy centre. It is an example to be followed in the region.
The beginning of the biggest investment project for the last 15 years is a proof that we are walking along the right way. 2005 was the year with the highest amount of direct investments, but they doubled within just the first three months of 2006. And this is a good start for reaching direct investments of EUR3BN, targeted by the Bulgarian Government for the current year, Mr. Ovcharov commented in turn, calling June 6 a happy day not only for the country's energy sector but for Gulabovo as well.
In Bulgaria AES will build the biggest new power capacity in Southeastern Europe. AES Maritsa Iztok 1 TPP will guarantee some of the lowest production costs for electricity in Europe. Mr. Paul Hanrahan refused to comment the exact size of the agreed purchase prices of the electricity to be generated by the power plant but specified that an agreement was reached for a 14% reduction from their initial offer. The importance of the project is increasing with a view to the forthcoming decommissioning of some of the Kozlodoui N-plant's generators and the expected shortage of electricity in Bulgaria. The first unit should be ready within 36 months and be commissioned in 2009 under the terms of the contract with the French company Alstrom. Just six months later the second unit will be put in operation as well. Actual work for the project's implementation starts in July. The design, construction, and commissioning of the power station will be realized by subsidiaries of Alstrom Power, which is a world leader in the construction of steam generators for lignite coal. A consortium between a Turkish and Bulgarian company was chosen as a sub-contractor, participants in the celebration said, without specifying the names. And while unofficially it is said that the Turkish firm is Gama (one of the top construction holdings in that country), the name of the Bulgarian one is still unknown.
Local building companies will get orders worth BGN200MN. In the construction period the project will open 2,000 working positions, and in peak moments up to 3,000 people will be working at the site near Gulabovo. Maritsa Iztok Mines EAD - Radnevo will be getting BGN80MN annually from the TPP for supplying coal to it. After the overall completion of the power plant the permanent working positions are expected to be 250.
On the background of poring optimism and the solemn ceremony, however, there remained the questions and the shadow of the other project within the same complex - that of Maritsa Iztok 3.

The project had a long history but all hindrances have already been overcome, said Peter Lithgow, the new executive, responsible for the implementation of the AES Maritsa Iztok 1 TPP project. According to him, the good team work has yielded its result. There is much work to be done, but Bulgaria will have a powerful station, complying to all ecological requirements, he specified, adding he hoped for fair cooperation with the local and central government in the construction fo the new capacity. The more so that the project plans also realization if various social programmes, especially in the sphere of education.

US INVESTMENTS IN BULGARIA IN US DOLLARS (1992-2005)
1993 10.5
1994 20.7
1999 54.7
2003 128.0
2005 61.7

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