Published by Wikileaks & The Guardian & Bivol.bg 
 id: 215404 date: 7/7/2009 8:56 refid: 09SOFIA363 origin: Embassy Sofia classification: SECRET destination: 09SOFIA69 header: VZCZCXRO8347 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    

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