Letter to EDC President Re: EDC Support for the Belene Nuclear Power Plant (NPP) in Bulgaria - July 15, 2004

Mr. Ian Gillespie
President and CEO
Export Development Canada
151 O'Connor, Ottawa, ON K1A 1K3
Fax: (613) 598-3080

July 15, 2004

Re: EDC Support for the Belene Nuclear Power Plant (NPP) in Bulgaria

Dear Mr. Gillespie:

It is my understanding that Export Development Canada (EDC) may have already tentatively agreed to provide financing to the Belene Nuclear Power Plant (NPP) in Bulgaria, if Atomic Energy Canada Limited (AECL) are successful in their bid to win the contract for the nuclear facility.

As you may know, Bulgaria began construction on the second NPP in the small town of Belene in the mid 1980s. Completion of the project, however, was stalled in 1992 following massive opposition by local residents from nearby Svishtov. The town suffered the most severe impacts from a massive earthquake in 1977, and residents were concerned about the repercussions of building a nuclear facility so close to an active fault line.

In 2002, following the closure of two units at Kozloduj, the Bulgarian government revived the project. The feasibility studies have been completed, and although the EIA is in the process of being revised prior to a decision being made by the Minister of Environment and Waters, the government has already begun rebuilding Belene. This is in breach of both Bulgarian environmental law and the Espoo Convention. This year the government also received a number of tenders to complete, or in some cases completely rebuild, the NPP. There are three competing international consortiums, of which AECL-Ansaldo-Bechtel-Hitachi was one.

While the selection of the consortium for the project will likely not be made until November, the Banker (a Bulgarian newspaper) has learned that the AECL bid is the highest ? largely because it proposes to rebuild, rather than complete, the NPP[i]. Therefore, even though AECL is unlikely to win the bid, Bulgarian newspapers, citing information provided to them by the Ministry of Energy, referred to EDC as a possible source of loan guarantees for the project.[ii] The Bulgarian weekly, CASH, in its issue of July 2, also cites AECL Vice-President Patrick Tey as saying that "The Canadian government supports the penetration of AECL into Bulgaria and the government, through the export credit agency EDC, is very interested [in this project] and looks forward to [supporting] this investment in Bulgaria along with SACE, the Italian credit agency" (translated from Bulgarian).

While EDC's mandate is to support Canadian trade abroad, and the Crown Corporation would likely want to consider financing the sale of CANDU technology - a favourite of the crown corporation - the implication from the above two sources of information is that EDC support for AECL in Bulgaria is already a fait accompli. Is AECL correct in its assumptions that EDC will likely support this nuclear power plant in Bulgaria if the company wins this bid? Does this assumption not preclude EDC from pursuing its own independent due diligence, including a review of the environmental impact assessment, and determine whether or not the project is economically, socially and environmentally viable?

I would also like to bring to your attention certain allegations that have been made in association with AECL and the Belene project. Earlier this year in April, a highly detailed letter sent to AECL accused the company of offering bribes to 20 individuals and companies in Bulgaria in association with the project. The letter also alleged that some payments, drawn from AECL's internal budget, had already been made to Bulgarian public servants. The RCMP are currently investigating the charges. If we assume that AECL wins the bid, will EDC wait until the RCMP have completed its investigation until they consider providing support for the project?

I look forward to receiving your thoughts and comments on the above questions.

Yours sincerely,

Fraser Reilly-King,
NGO Working Group on EDC

Petko Kovatchev,
CEIE Bulgaria/CEE Bankwatch Network

Jan Haverkamp,
WISE, Greenpeace

CC.: Robert Van Adel, President and CEO, Atomic Energy of Canada Limited
Darlene Pearson, Director, Office of the Auditor General of Canada


[i] http://www.banker.bg/article.asp?artno=24&date=2004/07/03&issue=26&category=7

[ii] "Business News" weekly, July 9, 2004, mentions that funding is expected from the export credit agencies of the countries, whose companies are candidates for the construction of the Belene NPP; "CASH" weekly, July 9, 2004, as above; "Dnevnik" daily, July 5,2004 and "Sedem" (Seven) weekly, July 7, 2004, mentions that future investors could rely on guarantees from export credit agencies such us the American OPIC, the French COFACE, Russia's Ex-Im bank and Canadian EDC" (incorrectly written as IDIS, transcripted from voice tape); "Novinar" daily, July 5,.2004 states " Other possible sources [of funding] are export credit agencies from the equipment suppliers' countries."; "Sega" (Now) daily, July 5, 2004, "The rest of the money [besides 350 Euro from Euratom] is expected to come from the export-credit institutions of the countries of the project winner." All of this information is based on quotations and references attributed to the Bulgarian Minsiter of Energy and Energy Resources, Milko Kovachev.