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OO RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL
DE RUEHSF #0363/01 1880856
ZNY SSSSS ZZH
O 070856Z JUL 09
FM AMEMBASSY SOFIA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6156
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE IMMEDIATE
RUEHIN/AIT TAIPEI IMMEDIATE 0017
RUEAIIA/CIA WASHINGTON DC IMMEDIATE
RHEBAAA/DEPT OF ENERGY WASHINGTON DC IMMEDIATE
RHEFDIA/DIA WASHINGTON DC IMMEDIATE
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC IMMEDIATE
RUEHBS/USEU BRUSSELS IMMEDIATE
RUEHUNV/USMISSION UNVIE VIENNA IMMEDIATE 0029

S E C R E T SECTION 01 OF 02 SOFIA 000363 
 
SENSITIVE 
SIPDIS 
 
FOR SPECIAL ENVOY FOR EURASIAN ENERGY RICHARD MORNINGSTAR 
FOR USEU ENERGY OFFICER RICHARD FROST 
FOR EUR/CE JENNIFER HOOVER 
 
E.O. 12958: DECL: 07/01/2034 
TAGS: ENRG IAEA PREL PGOV BU
SUBJECT: BULGARIA:  BELENE NUCLEAR POWER PLANT:  MORE 
TROUBLES 
 
REF: A. SOFIA 0069 
     ¶B. SEPTEL 
 
Classified By: Ambassador Nancy McEldowney for reasons 1.4 (b) and (d). 
 
¶1.  (S)  SUMMARY: Bulgaria's highest profile energy project 
-- the Belene Nuclear Power Plant (BNPP) is dogged by cost 
overruns, financing woes, construction delays, and now 
serious safety and quality assurance concerns.  Belene may 
end up costing Bulgaria more than money in the long run. 
Despite the repeated objections by project experts, the 
Bulgarian National Electric Company (NEC) is recklessly 
pressing forward in order to announce the start of the 
official "construction" phase of the NPP, and to secure 
funding from international investors.  Belene project experts 
have privately expressed serious concerns that if 
construction continues on its current path -- ignoring safety 
and quality assurance -- it could pose a huge risk. END 
SUMMARY. 
 
--------------------------- 
SAFETY AND QUALITY IGNORED 
--------------------------- 
 
¶2.  (S)  Marred by many technical, political, and financial 
problems, the Belene NPP project continues to move forward 
despite strong warnings about project safety and quality by 
project experts.  NEC, which controls 51 percent of the 
project along with strategic investor Germany's RWE with 49 
percent, keeps pressing to start the "Site Preparation Phase" 
in September 2009 even before the "Demolition Phase" is 
completed in August 2009. (Demolition Phase includes the 
destruction and removal of the existing old site 
infrastructure.)  According to project insiders, NEC and its 
on-site construction manager, ignore environmental, safety, 
and quality assurance concerns and illegally canceled several 
"stop work orders" issued at the site because of safety 
violations. 
 
¶3.  (S)   Pressed to meet its own self-imposed deadlines, NEC 
grew increasingly frustrated with its site 
architect-engineers and their repeated calls to follow 
international quality assurance standards, their opposition 
to the "overnight creation" of temporary structures, and the 
lack of a Quality Assurance (QA) Program Plan for the 
temporary structures.  (Construction of temporary structures 
during the "Demolition Phase" and "Site Preparation Phase" is 
a routine process and facilitates the storage of equipment 
and manufacturing of key construction components such as 
concrete).  As a result, NEC permanently modified its 
contract with the architect-engineers and removed their 
responsibility to issue construction permits for on-site 
temporary structures.  Instead, NEC asked the Bulgarian 
Ministry of Regional Development and Public Works (RDPW) to 
issue the approvals - which they subsequently do without 
oversight or proper technical documentation.  Belene project 
experts stated that this was a violation of international 
nuclear industry best practices, because the 
architect-engineering company could no longer validate the 
quality or performance of the on-site temporary structures. 
 
¶4.  (S)  Another problem area is the lack of an overall 
detailed technical and quality assurance plan for BNPP.  As 
of late June 2009, Russia's Atomstroyexport (ASE) -- Belene 
NPP's main foreign contractor -- has yet to provide NEC with 
an overall Quality Assurance (QA) Program Plan.  A QA Program 
Plan is required before the Technical Design Approval Order 
(TDAO) can be issued and certainly well before the Bulgarian 
Nuclear Regulatory Agency (NRA) can issue a Construction 
Permit for BNPP, making the targeted start dates of September 
2009 and December 2010 virtually impossible. 
 
------------------------------- 
LESS THAN A GLOWING ENDORSEMENT 
------------------------------- 
 
¶5.  (S)  NEC is rushing to complete the "Demolition Phase" 
and start the "Site Preparation Phase" to make Belene look 
financially viable, attract additional international funding, 
 
SOFIA 00000363  002 OF 002 
 
 
and keep RWE as a strategic investor.  Our contacts told us 
RWE will not provide funding until "financial closure" and it 
sees the "first concrete poured," which is currently 
estimated for December 2010.  According to our contacts, 
"Site Preparation" activities will be called "Construction" 
in the media to make it appear that the project is 
progressing ahead without any problems.  With the 
"Demolition" slated for completion in August 2009, NEC plans 
to begin "Site Preparation" in September 2009, despite the 
numerous environmental, safety, and quality assurance 
objections raised.  Interestingly, ASE Vice President Genady 
Tepkyan publicly stated on June 20, that ASE will start 
"construction" of Belene NPP in September 2009. 
 
¶6.  (S)  RWE is clearly feeling "buyer's remorse" about its 
participation in Belene.  XXXXXXXXXXXX told us in 
February that RWE worries about Belene's lack of transparency 
and working with ASE and Bulgarian subcontractors.  Belene 
experts said that RWE remains "in the dark" on most on-site 
day-to-day and technical issues.  During a late May 2009 
Belene project meeting, RWE asked numerous basic questions, 
indicating that they have not seen any of the on-site safety 
and environmental reports.  On more than one occasion NEC 
prevented their contractors and subcontractors from speaking 
directly with RWE experts, often reminding them of their 
confidentiality agreements when they tried to answer RWE's 
questions.  There is speculation that NEC is trying to keep 
RWE from abandoning the project by "glossing" over serious 
technical and safety concerns for the sake of moving the 
project forward. Media reports theorize that RWE is trying to 
pull out of Belene.  Some contacts suggest that RWE will wait 
until after the Bulgarian (July 5) and German (September) 
elections before announcing the fate of its future 
participation in BNPP, as GERB officials have expressed 
strong negative views toward the project. 
 
¶7.  (S)  The current BSP-led government has repeatedly pushed 
for Belene, especially with 700 million euros in sunk costs 
and priceless political capital invested in the project.  The 
Bulgarians and RWE initially wanted commercial financing for 
the entire project, but were unable to attract funding from 
Western banks -- wary of extending a large loan to an 
increasingly questionable project in the midst of the global 
financial crisis.  In early June, Bulgarian Energy Holding 
(BEH) CEO Galina Tosheva confirmed Russian approval for a 3.8 
billion EUR (5.4 billion USD) loan for Belene.  The 
Bulgarians are still in the dark on actual details.  Tosheva 
told us that she expects Russian PM Putin will dictate the 
loans terms directly to Bulgarian PM Stanishev. 
 
¶8.  (S)  COMMENT:  Vested interests -- the current BSP-led 
government, NEC, well-connected politicians, Bulgarian energy 
oligarchs, and Russian investors -- keep pushing the project 
at all costs.  NEC has ignored repeated warnings on safety 
and quality assurance from Belene project experts and 
international nuclear industry best practices.  Since BNPP 
began, the corresponding technical documentation, the ongoing 
demolition, and site preparation activities have not been 
investigated, audited, or approved by the International 
Atomic Energy Association (IAEA).  Bisser Boev, a member of 
GERB's economic team, told us that as of late June, Belene 
also has no updated economic or technical feasibility study. 
We should encourage the next government to quickly begin its 
due-diligence on the project; stressing the importance of 
meeting all international safety and quality assurance 
standards, and bringing in the IAEA and the EU's European 
Atomic Energy Community (EURATOM) to perform an on-site 
inspection.  END COMMENT. 
McEldowney