VZCZCXRO6005
PP RUEHAG RUEHAST RUEHDA RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA RUEHLN
RUEHLZ RUEHNP RUEHPOD RUEHROV RUEHSK RUEHSR RUEHVK RUEHYG
DE RUEHSF #0815/01 3641341
ZNR UUUUU ZZH
P 291341Z DEC 08
FM AMEMBASSY SOFIA
TO RUEHC/SECSTATE WASHDC PRIORITY 5668
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUEAIIA/CIA WASHINGTON DC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEHUNV/USMISSION UNVIE VIENNA PRIORITY 0025
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 03 SOFIA 000815 
 
SIPDIS 
 
PASS TO COMMERCE SARAH LOPP 
PASS TO MARC HUMPHREY 
 
E.O. 12958: N/A 
TAGS: ENRG TRGY BEXP BTIO BU
SUBJECT: OVERVIEW OF BULGARIA'S CIVIL NUCLEAR ENERGY PROGRAM 
 
REF: A. STATE 127468 
     ¶B. SOFIA 00641 
     ¶C. SOFIA 00708 
     ¶D. SOFIA 00033 
     ¶E. SOFIA 00089 
 
¶1.  (U)  This is Embassy Sofia's response to Ref A Department 
of Commerce request for information on Bulgaria's civil 
nuclear energy program. 
 
 
OVERVIEW OF BULGARIA'S CIVIL NUCLEAR POWER PROGRAM 
--------------------------------------------- ----- 
 
 
¶2.  (U) Bulgaria ratified the Statute of the International 
Atomic Energy Agency (IAEA) in 1957, and, in 1961, 
constructed its first nuclear research reactor, the IRT-2000. 
 In 1966, Bulgaria and the Soviet Union signed an agreement 
for commercial nuclear units which provided the basis for the 
country's nuclear power program.  Construction on the 
Kozluduy Nuclear Power Plant (KNPP) EAD -- the only nuclear 
plant currently operating in Bulgaria -- began in 1970. 
Kozluduy is located on the Danube border with Romania and 
originally consisted of four VVER-440 V230 reactors (units 
1-4) and two VVER 1000 reactors (units 5-6).  Only units 5 
and 6 operate now as Bulgaria shut down blocks 1-4 as part of 
its EU accession agreement.  Units 1 and 2 were shut down due 
to safety concerns in 2003.  Units 3 and 4 were taken 
off-line at the end of 2006, on the eve of Bulgaria's EU 
accession.  As compensation, the EU created the 550 million 
Euro Kozluduy International Decommission Support fund. 
Managed by the European Bank for Reconstruction and 
Development (EBRD), this fund supports Bulgarian energy 
efficiency and renewable energy projects. 
 
¶3.  (SBU) Bulgaria plans to expand its nuclear power program 
with the construction of two new units at Belene, also 
located near the Danube border with Romania.  Site works 
started in 1980 and construction of a reactor began in 1987, 
but building was aborted in the early 1990s due to lack of 
funds.  In 2005, the Bulgarian government approved the 
construction of a new 2000 MWe plant at Belene.  The 
Bulgarian National Electric Company (NEC) hired WorleyParsons 
as the Architect Engineer for the financing and construction 
of the plant in 2005.  In 2006, NEC chose Russia's 
Atomstroyexport (ASE) over a Skoda-led consortium to build 
two 1000-MWe AES-92 VVER units with third generation 
reactors.  Russia leads a consortium, including Siemens-Areva 
NP and Bulgarian enterprises, in the EUR 4 billion project. 
A construction permit was issued in July 2008 and ASE signed 
a contract with Siemens-Areva consortium for the 
instrumentation and control systems in November 2008. 
Bulgaria is keeping majority ownership of the plant, and in 
November 2008 selected a strategic investor -- Germany's RWE 
-- via a tendering process for the other 49 percent.  NEC and 
RWE signed the contract for Belene in December 2008. 
Belgium's Electrabel may also join the project.  The first 
reactor was originally scheduled to come into operation 
between 2013-2015, but significant delays and cost over-runs 
are likely. 
 
¶4.  (SBU) Current regional electricity shortages and the 
desire to become a regional "energy hub" fuel Bulgaria's 
desire to expand its civil nuclear power program.  Before the 
closure of Kozluduy units 3 and 4, Bulgaria was a net 
electricity exporter in the Balkans, covering 50 percent of 
the region's electricity deficit.  In 2006, Bulgaria exported 
7.8 billion kWh/year to Greece, Macedonia, Albania, Kosovo 
and Serbia.  This number fell 42 percent to 4.5 billion 
kWH/yr in 2007.  Although Bulgaria still has capacity to 
cover between 10 and 20 percent of the region's electricity 
deficit, the Bulgarian government was forced to stop all 
electricity exports in order to cover Bulgarian energy needs 
from January-March 2008.  Citing the Balkan region's energy 
deficit, the Bulgarians have lobbied hard for the re-opening 
of Kozluduy reactors 3 and 4, which they believe could be 
safe and operational with limited re-furbishing.  The EU 
disagrees.  According to the EBRD, reactors 3 and 4 are 
inherently unsafe, and the re-opening of the reactors is a 
complete non-starter.  The closure of Units 3 and 4 is part 
of Bulgaria's EU accession acquis, and for this to be 
changed, all 27 member states must agree to renegotiate 
Bulgaria's accession agreement.  Nevertheless, some Bulgarian 
officials have cited Article 36 of Bulgaria's acquis -- which 
states Bulgaria could ask for the reopening of the reactors 
 
SOFIA 00000815  002 OF 003 
 
 
should a critical situation in the region emerge -- to argue 
for the re-opening of the units 3 and 4.  The Kozluduy site 
may also be an attractive site for the development of new 
reactors (future units 7 and 8).  The infrastructure is 
already in place and the Bulgarian government is supportive, 
although officials say it must be a commercial, rather than 
Government-subsidized, project. 
 
¶5.  (SBU) The Ministry of Economy and Energy is responsible 
for the country's nuclear power industry.  The two main 
controlling entities are the Nuclear Regulatory Agency (NRA), 
established under the Safe Uses of Nuclear Energy Act of 
2002, and the Kozluduy Nuclear Power Plant (KNPP) EAD.  The 
NRA assumed the functions of its predecessor, the Committee 
on the Safe Use of Atomic Energy for Peaceful Purposes 
(CUAEPP), created in 1985.  The NRA regulates nuclear 
installations in relation to safety and radiation protection, 
as well as the management of radioactive waste.  The NRA has 
been a member of the Western European Nuclear Regulator's 
Association (WENRA) since 2003. 
 
¶6.  (U) NEC, Kozluduy NPP EAD, Mini Maritsa Iztok, EAD, 
Maritsa East 2 TTP EAD, Electricity System Operator EAD, 
Bulgargaz EAD, Bulgartransgaz ED, and Bulgartel EAD were 
incorporated into the Bulgarian Energy Holding (BEH) EAD in 
September 2008.  BEH EAD is a shareholder company with 100 
percent state-owned participation.  All companies brought 
together in the holding structure preserve their operational 
independence and licenses even as they are all owned and 
directly subordinated to the corporate center BEH EAD.  BEH 
functions include the acquisition, management, assessment and 
sale of participation in trading companies and the day-to-day 
operational business activities in the field of generation, 
production, transmission, transit, storage, management, 
distribution, sale and/or purchase of natural gas, 
electricity, thermal power, coal, and any other type of 
energy and raw materials for production. 
 
 
INTERNATIONAL AGREEMENTS 
------------------------ 
 
 
¶7.  (SBU) Bulgaria is a signatory to the following 
conventions:  Convention on Nuclear Safety; Convention on 
Assistance in the Case of Nuclear Accident or Radiological 
Emergency;  Convention on Early Notification of a Nuclear 
Accident; Convention for the Physical Protection of Nuclear 
Material; Vienna Convention on Civil Liability for Nuclear 
Damage and the Joint Convention on the Safety of Spent Fuel 
Management and on the Safety of Radioactive Waste Management. 
 Bulgaria is also party to the Nuclear Non-Proliferation 
Treaty (NPT) as a non-nuclear weapons state, and its 
safeguards agreement under the NPT came into force in 1973. 
It is a member of the Nuclear Suppliers' Group (NSG), but not 
yet of Euroatom.  In 2000, Bulgaria signed the Additional 
Protocol in relation to its safeguards agreements with the 
IAEA. 
 
¶8.  (SBU) In March/April 2008, the U. S. government and 
Bulgaria signed a Fuel Return Agreement that allows U. S. and 
Bulgarian experts to remove spent nuclear fuel (HEU) from the 
ITR-2000 reactor in Sofia and transport it to Russia, its 
original source.  The agreement also lays the foundation for 
increased scientific research and cooperation at the reactor 
between both countries.  All together, over 50 million 
dollars of U.S., Bulgarian, and IAEA funds will transform the 
existing outdated reactor into a safe, state-of-the-art 200KW 
research and training reactor -- the most advanced kind in 
the Balkans. 
 
 
OPPORTUNITIES FOR U. S. INDUSTRY 
-------------------------------- 
 
 
¶10. (SBU) At this time, there are no anticipated 
nuclear-related tenders.  There will be opportunities for U. 
¶S. industry in consulting services, plant construction 
management and reactor sales, should the Bulgarian government 
decide to build new units 7 and 8 at Kozluduy or, in the very 
remote possibility that the EU allows the reopening of units 
3 and 4.  In addition, there may be opportunities for U. S. 
industry to support the conversion and operation of the 
IRT-Sofia reactor with low enriched uranium (LEU).  The 
primary companies involved in Bulgaria's civil nuclear sector 
 
SOFIA 00000815  003 OF 003 
 
 
are Bulgaria's Energy Holding, Russia's ASE, WorleyParsons, 
Westinghouse, RWE, Siemens-Areva, Bulgarian companies such as 
Risk Engineering and other smaller Bulgarian companies (SEE 
REFTEL B).  Russia's TVEL, through Technabexport (Tenex), 
provides fuel cycle services, and Bulgaria's State Enterprise 
for Radioactive Wastes (SE-RAW) is responsible for waste 
management. 
 
¶9.  (SBU) Although there is a manufacturing base in Bulgaria 
(which includes high-tech components and heavy industry) much 
of the nuclear-related products and services will need to be 
outsourced.  Bulgaria does have a highly qualified and well 
trained nuclear workforce.  However, an expansion of civil 
nuclear power will likely require a significant number of 
foreign workers. 
 
 
FOREIGN COMPETITORS 
------------------- 
 
 
¶11. (SBU) Russia, Germany, Canada, and other EU nations have 
expressed interest in Bulgaria's civil nuclear power program. 
 In 2006, three foreign companies, the Canadian firms Cameco 
and Resources House, along with the Russian-owned TVEL, 
expressed interest in the research and exploration of 
Bulgarian uranium deposits.  Since Bulgaria is an EU member, 
¶U. S. companies will likely experience tough competition from 
other EU member state companies.  In addition, Russia 
dominates the Bulgarian energy sector (SEE REFTELS B-E). 
With few hydrocarbons of its own, Bulgaria relies on Russia 
for more than half of its energy needs.  In addition, 
Bulgaria is party to several other strategic 
energy partnerships with Russia -- the South Stream and 
Burgas-Alexandroupolis pipelines -- along with the Belene 
nuclear power plant.  These partnerships, combined with a 
lack of a common European Energy policy, are harming the 
ability of Europe and the United States to realize their own 
priority projects for the region. 
McEldowney