EKIP– Expert Club for Economics and Politics A Different Opinion
After the publication of the summary of the infamous BAS report on the Belene NPP and its financial profitability, the government is doing everything in its power to convince the public that the Belene NPP is not only a viable, but also a necessary project. This, of course, is complete nonsense. The only reason any politician would be interested in this project is because it represents an incredible opportunity to "embezzle" (i.e. steal) BILLIONS from the taxpayer's pocket. In this article, we will review and refute the three main arguments (myths) that are being put forward in support of this project. We start with the most important one.
Myth 1: Belene NPP is a financially viable project
This is the government's main argument in support of the Belene NPP. For years, the government has been trying to convince us that this project is viable, contrary to all the studies that anyone has done on the subject. Until very recently, this was just empty talk. Now, however, after the publication of the infamous BAS report, the government has some institutional support for this thesis, besides its own.
Actually, I have to correct myself. The Bulgarian Academy of Sciences has not published any report. They simply published a summary saying that perhaps, if done in a certain way, there is a possibility that the Belene NPP will not be a complete financial disaster. The problem is that this "report" is not a report at all, but simply a summary of some report. The report itself was never presented by the Bulgarian Academy of Sciences and most likely never will be.
Let's recall the absurd story surrounding this "report". First, the government tasked the Bulgarian Academy of Sciences with preparing an analysis of the financial profitability of the Belene NPP, that is, to present its opinion, based on the available data, whether this project will be able to justify the costs that will be required for its implementation in the long term. The government announced that based on this analysis it would decide whether the Belene NPP would be built or not. If the Bulgarian Academy of Sciences says that the project is not financially profitable, then there will be no new nuclear power plant. Or at least that's what we were told...
Political pressure forced the Bulgarian Academy of Sciences to change its assessment
Autumn comes and in October the Bulgarian Academy of Sciences publishes its report. The media immediately exploded that the Bulgarian Academy of Sciences says that the Belene NPP is not a profitable project and it is not advisable to build it. Because that was precisely the position of the Bulgarian Academy of Sciences at the time. Everyone decided that the project was over – the government no longer has any choice but to abandon it. However, at that time we clearly underestimated the persistence and, above all, the impudence of the ruling party. Because they, obviously dissatisfied with the conclusions, returned the report back to the Bulgarian Academy of Sciences for "editing". And a few weeks later, a summary of the "edited" report suddenly appears, according to which the Belene NPP is now a profitable project.
Notice what a farce this is. BAS publishes a report according to which the Belene NPP would not be a successful project, the government does not like this and sends it back for revisions and suddenly BAS believes that the Belene NPP could be a successful project. The fact that the report was edited entirely under political pressure became abundantly clear a few days ago, when the interim version of the report was leaked onto the Internet. It is difficult to imagine such an absurd farce anywhere else but in Bulgaria.
He confirmed the absurdities surrounding the BAS report, the main arguments in support of the Belene NPP are two. One is that Bulgaria needs greater electricity production, and the other is that the state will not need to pay for the Belene NPP if a private investor is found. Both arguments are complete nonsense.
Myth 2: Bulgaria needs more electricity
It is not at all clear on what basis this myth is based. If we look at historical data, we see that since 2011, electricity consumption has been constantly falling. In 2015, it was 9% lower than in 2003 (for more information, see this article ). And this is a trend that continues and will continue in the future, because the country's energy efficiency is improving. Isn't the government itself supposedly pursuing a targeted policy to improve energy efficiency? The "free" renovation program is for precisely such a purpose (allegedly?). How is it that the government is both trying to improve the country's energy efficiency and predicting that we will need more electricity?
Here, some may argue that economic growth requires the consumption of more electricity. But this is categorically not true if energy efficiency is improved. The Bulgarian economy has not stopped growing during the period 2003-2015, but electricity consumption has fallen. As we have written before, according to a report by the European Commission , during the period 1990-2015, electricity consumption in Bulgaria fell by 33%. The forecast of the Bulgarian Industrial Chamber is that this trend will continue at least until 2025, and probably even later, if we continue to improve our energy efficiency.
And we are not the only such example. The electricity consumption of every developed economy in the world has generally remained at the same level for several decades (in the middle and towards the end of the 20th century). And the economic development of these countries has clearly not stagnated and their inhabitants are richer now than they were a few decades ago. So, the thesis that we need more electricity is a complete myth and is not based on sound logic and any data.
Myth 3: Belene NPP can be financed entirely with private funds
While the government has never explicitly said that the Belene NPP can be financed entirely with private funds, it has at least hinted at it and is trying to leave such an impression on the public. The idea is to blind the taxpayer's eyes that this huge project in terms of its cost will not come out of his nose. In reality, however, the Belene NPP will not be able to be financed even half with private funds.
There is not a single nuclear power plant in the world that has not relied in some way on state support for its construction. At least the very infrastructure (the electrical grid) on which the power plant is built is almost always state-owned, and in Bulgaria it has also become clear that this will have to be the case. That is, there will be state costs for the new nuclear power plant to be connected to the grid. Beyond that, in every case of construction of a nuclear power plant in the world, the state must guarantee the future revenues of this plant, through previously concluded long-term contracts for the purchase of electricity.
No private investor would agree to undertake the construction of a nuclear power plant without a prior guarantee from the government that the electricity produced will be purchased at a price that is advantageous to him. This is because of the huge initial capital investment that each nuclear power plant requires. Not to mention the extremely long construction period. Nuclear power plants are the most difficult to build of all types of power plants. This accordingly increases their investment risk and makes investors more cautious. That is why government guarantees are required.
In short, state financing of the Belene NPP is inevitable. And this is a project that will cost at least 20 billion leva. This would be the largest state investment in a single project, even assuming that a private investor would cover 50% of the costs (which is a fantastic assumption). This money will come out of the nose of the Bulgarian taxpayer, and for electricity that is not even needed.
Conclusion
It is sad that we are talking about the Belene NPP again, it is sad that the government continues to try to push through an absolutely unnecessary project that could have catastrophic consequences for state finances. But unfortunately it is not surprising. Still, this is an incredible opportunity for certain political groups and their associated "private investors" to appropriate huge sums of money seized from citizens.
