Bulgaria's government has put on ice a €4 billion project to build a second nuclear power plant, citing lack of funding and turning down a financing proposal from Russia.
The centre-right government of Prime Minister Boiko Borisov has not formally scrapped the Belene project, on the Danube, some 250 kilometres northeast of Sofia. But work on it has stopped and the cabinet has said it will resume only if a strategic international investor turns up.
The government is struggling to keep its budget balanced to qualify for the euro-area entry mechanism ERM II, while Mr Borisov has complained that unpaid bills of €1.8 billion left by his predecessors could prevent him from achieving the euro goal. He has said the state cannot pay for Belene.
A joint venture by Russia's Atomstroyexport, France's Areva and Germany's Siemens won a tender to build the plant, which is to include two 1,000 megawatt Russian reactors.
Mr Borisov has balked at a proposal by Russia to provide interim financing of €2 billion for the project in exchange for an unspecified share in the future plant. He argued the real cost of the plant might be twice as high, taking into account the auxiliary facilities and infrastructure required.
Meanwhile, energy minister Traicho Traikov has told parliament that Bulgaria will wait for "a strategic investor" other than Russia and will not cede a majority stake in Belene. He said Bulgaria could still accept Russian funding if the main investor is somebody else.
EU energy chief Gunther Oettinger, during a recent international energy meeting in Sofia, spoke about co-ordinating the EU and Bulgaria's positions on nuclear energy but stopped short of making any concrete statement about Belene.
The project was started more than 20 years ago but was frozen in the early 1990s after protests by environmentalists. It was relaunched in 2004 under then prime minister Simeon Sachs-Coburg Gotha and construction work began under Borisov's predecessor, Sergei Stanishev. More than €1 billion has been spent just to build the foundations.
Bulgaria closed four out of six units in its only nuclear power plant in Kozlodui, 200 kilometres north of Sofia, as a pre-condition to join the EU in 2007.
The EU said that the Soviet-designed Kozlodui units were unsafe. There are no such concerns on the remaining two units, but their lifetime expires in 10 years and without a replacement, electricity shortages and price hikes could ensue.