* Deal needs approval of next Bulgarian government
* Would reduce Bulgaria's energy reliance on Russia
* New reactor would come on stream by 2023
(Adds details, background)
By Tsvetelia Tsolova
SOFIA, Aug 1 Bulgaria, one of five EU states
that depend totally on Russia for nuclear fuel, and Westinghouse
Electric Company signed a shareholder agreement on Friday paving
the way for construction of a new nuclear reactor estimated to
cost $5 billion.
The deal, which still requires the approval of Bulgaria's
next government, will help the Balkan country reduce its energy
dependence on Russia at a time of increased tensions between
Moscow and the European Union over Ukraine.
Bulgaria currently operates two Soviet-made 1,000 megawatt
nuclear reactors at the Kozloduy site on the River Danube.
Westinghouse, the world's largest nuclear fuel producer and
part of Japan's Toshiba group, will take a 30 percent
stake in Kozloduy NPP - New Build, which will construct the new
units at the Kozloduy site.
"The agreement is signed. However, it will only enter into
force if approved by the next government," said Ivan Genov,
chief executive of Kozloduy nuclear plant.
Bulgaria's Socialist-led government resigned last week,
paving the way for an interim cabinet to take over for two
months ahead of a snap election in October. The main
centre-right opposition GERB party is tipped to win the
RELIANCE ON RUSSIA
The deal, once approved, will allow Bulgaria to start talks
on the financing and construction of one Westinghouse AP-1000
nuclear reactor at a total estimated cost of about $5 billion.
In a separate statement, Westinghouse said it will provide
all of the plant equipment, design engineering and fuel and will
open a tender next year for the construction of the unit, which
should come online by 2023.
Bulgaria, along with the Czech Republic, Finland, Hungary
and Slovakia, are all home to nuclear reactors that are 100
percent dependent on Russian nuclear fuel.
Apart from nuclear, Bulgaria meets almost all of its gas
needs with Russian imports and its only oil refinery is
controlled by Russia's LUKOIL.
The EU this week for the first time agreed economic
sanctions against Russia, marking the biggest confrontation
between Moscow and the West since the Cold War.
The sanctions avoid physical energy supplies, although they
target technology for future oil projects. The EU is redoubling
its efforts to reduce reliance on Russian energy supplies.
Bulgaria is one of the few European nations to build new
nuclear plants in the wake of Japan's 2011 Fukushima disaster as
it seeks to keep a lid on electricity costs while cutting carbon
emissions in its energy sector.
Genov said the new reactor would be largely financed by
loans from credit export agencies, but the financing is yet to
be agreed. He said Kozloduy will be able to repay the loans by
selling the electricity on the local and regional market.
Dismissing criticism that the deal was concluded at the last
minute by a government leaving office, Westinghouse said the
agreement had been signed after consultations with all Bulgarian
(Additional reporting by Barbara Lewis; Editing by Gareth