Nuclear power producer Nuclearelectrica intends to retain a financial consultant for Unit III of the Cernavoda Nuclear Power Plant. The financial consultant will have a say in the $1 billion deal, which had stirred interest among the largest investment banks operating in Romania even before it was launched on the market.
"At the beginning of December, we asked several investment banks and financial service companies to submit letters of intent in order to become the financial consultant of Nuclearelectrica for Unit III of the nuclear power plant in Cernavoda. The consultant will have to revise the feasibility study drafted last year, to come up with the best solution for the project funding without requiring State warranties, as well as to find partners for this financing," Teodor Chirica, head of the Business Development Unit at Nuclearelectrica told Ziarul Financiar.
Among the targeted banks are Deutsche Bank and the Romanian Development Bank (BRD) - Groupe Societe Generale.
Operating costs for Cernavoda Unit III are estimated to reach as high as $1 billion, according to the feasibility study compiled last year.
The nuclear power plant based in Cernavoda is Eastern Europe's only such plant designed in accordance with the Western standards and is equipped with five CANDU reactors, but only Unit I is actually operating, with 700 MW in installed power.
Unit III will benefit from a project finance that involves the funding of an industrial or commercial project. To recoup the loan, the financier eyes the revenues resulted from that particular project, considering only the goods associated to the project as warranty. A company managing the project is needed for this financing solution and can attract shareholders such as the State, private investors, banks or power companies. The equity of such a company usually accounts for 20%-30% of the project's total value, namely $200-300 million for the Unit in Cernavoda, while the rest of the amount will be covered from foreign financing sources. The project for Unit III at Cernavoda will not imply State warranties, but it needs reasonable commercial and political guarantees to make it appealing to investors. adrian.mirsanu@zf.ro
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