Bulgaria's Cabinet officially signed the financial agreements with US power company AES for the construction of a 670-megawatt replacement lignite-fired capacity at Maritsa East 1 thermal power plant. This puts an end of all preparation works concerning the project and its construction is expected to be launched in the beginning of 2006. The agreements mark the beginning of the "execution phase" of the Maritza-Iztok 1 project worth more than EUR 1 B, AES President Paul Hanrahan told reporters after the signing ceremony.
The company has engaged to build two electricity generation units, including desulphurising installations and the adjacent infrastructure.
This is the biggest green-field investment in Bulgaria, as AES will pour some EUR 1.042 B into the project. The desulphurising installations alone will engulf some EUR 140 M, which is over 12% of the entire investment. As much as 70% will be borrowed from CALYON, ING Bank, BNP Paribas and the European Bank for Reconstruction and Development (EBRD).
The 12 1/2 year credit agreement has no state guarantee, and will be paid back from the project's revenues, said Matthew Bartley, the executive director of AES Maritza Iztok 1, the Bulgarian unit of AES.
AES was granted a 35-year concession license by the State Energy and Water Regulation Commission and the Environment Ministry. Under the projects the local companies in Galabovo, where the plant is situated will receive orders worth over BGN 200 M.
At the ceremony Bulgaria's Economy and Energy Minister Rumen Ovcharov handed a first class investor certificate to AES 3C Maritsa East 1, the Bulgarian subsidiary of AES, meaning that the government will fund the infrastructure development for the plant.
The Maritsa East lignite coal mining complex in southern Bulgaria, which generates 30% of Bulgaria's electricity, has three coal-fired power plants the government is trying to expand, extend the life of and make more environmentally sound.
US-based AES in 2001 has signed a EUR 980 M deal for the construction of a 670-megawatt plant at Maritsa East One. The project has been delayed due to lack of financing.
The new plant is meant to compensate for planned reactor shutdowns in the country's only nuclear plant in Kozloduy. Two units of the nuclear plant should be closed by the end of next year as part of EU entry agreements.
