October 28 (SeeNews) - Germany's RWE has decided to end its participation as a strategic investor in the Belene nuclear power plant project in Bulgaria due to the global financial crisis, Bulgaria's state-run news agency BTA reported on Wednesday.
In a letter to the Bulgarian side, the German company said the failure to sign a final agreement with the building contractor and the lack of success in packaging the project financially were the other reasons to abandon the deal, BTA (www.bta.bg) quoted Deputy Economy Minister Maya Hristova and the Executive Director of the Bulgarian Energy Holding (BEH Group), Galina Tosheva, as telling a news conference.
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The project will have to be reviewed and restructured following RWE's pullout, a process that will take about 18 months, Tosheva said.
Work is already underway on drafting the selection criteria for a consultant that will advise the financial repackaging of the project, BTA said.
RWE and Bulgarian power grid operator NEK, a unit of BEH, teamed up in a 49:51 joint venture in the Belene project. NEK has hired Russia's Atomstroyexport to build the 2,000 megawatt power plant in Belene, on the Danube river. The contract between NEK and Atomstroyexport projects the value of construction works at around 4.0 billion euro ($5.9 billion).
The contract contains an inflation adjustment clause for the cost of the plant but does not include the price of the construction of adjacent infrastructure. The preparation of the construction site in Belene started last year but raising funds for the actual construction works has been a key obstacle to further progress.
According to different estimates carried by Bulgarian media, project costs may run up to 6.0 billion or even 10 billion euro.