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Bulgaria Says Situation over BNP Paribas-Syndicated Loan Serious

Date: 27.08.2009

Bulgaria's state power utility NEK will have to either renegotiate BNP Paribas-syndicated loan or pay back the full amount, the economy and energy minister said on Tuesday.

The government hired BNP Paribas SA, France's largest bank by market value, to arrange a EUR 250 M loan to help fund construction of a EUR 4 B nuclear power plant at the Danube river town of Belene.

NEK's poor results however forced it to breach the conditions on the loan making it callable, Economy and Energy Minister Traicho Traikov said.

"The situation is very serious", Traikov told a news conference.

The new Bulgarian government is to decide by the end of September whether to scrap the construction of the multi-billion Belene nuclear power plant.

Bulgaria's previous Socialist-led government chose last year German power utility RWE to become a strategic partner in the Belene project with a stake of 49%. State power utility NEK, which has a majority stake in the plant, contracted Russia's Atomstroyexport to build the two 1,000 megawatt reactors.

The coalition did not leave a stone unturned in its attempts to secure Russian funding for the construction of Belene nuclear power plant shortly before its term expired in the summer.

It started talks with the Russian government on a EUR 3.8 B state loan for the project and offered guarantees for it.

The new government of the center-right GERB party says it is not willing to provide any state guarantees for loans and will make a thorough analysis and research before deciding on the future of Belene.

Bulgarian energy experts and some rightist parties have called for a halt, saying the loan will translate into a BGN 1300 tax burden for each Bulgarian taxpayer, electricity hikes for decades on end, outdated and dubious Russian nuke units.

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