German utility RWE has abandoned plans to participate in the construction of a 2000 MW nuclear plant in the Bulgarian Danube town of Belene due to funding problems, officials said on Wednesday.
"There are two main reasons for RWE decision - there is no contract with the executor of the project and no clear financing structure," Galina Tosheva, head of the Bulgarian Energy Holding, which groups the country's top energy assets, told a news conference.
Bulgaria's new centre-right government will hire a consultant to help it decide how to proceed and attract new investors, Tosheva said, adding the process could take a year and a half.
The previous Socialist-led government chose last year German power utility RWE to become a strategic partner in the Belene project with a stake of 49%.
State power utility NEK has a majority stake in the plant and has contracted Russia's Atomstroyexport to build the two 1 000 megawatt reactors.
The new government, which has put Belene under review due to rising costs, plans to cut its shares in the project from 51% to 20-30%, which will still allow the country to keep its blocking quota.
The previous cabinet started talks with the Russian government on a EUR 3.8 B state loan for the project and offered guarantees for it.
It hired BNP Paribas SA, France's largest bank by market value, to arrange a EUR 250 M loan to help fund construction of the nuclear power plant at the Danube river town, whose price tag has towered from EUR 4 B to EUR 10 B.
NEK's poor results, triggered by a fall in power consumption, however forced it to breach the conditions on the loan, making it callable.
The cabinet of the center-right GERB party says it is not willing to provide any state guarantees for loans and is yet to decide whether to scrap or push ahead the construction of the multi-billion Belene nuclear power plant.