Project finance considered for Cernavoda

The Government is considering the possibility to have the necessary funding to build Unit 3 of the Cernavoda nuclear power plant obtained through project finance, which does not require any security from the State, Bogdan Baltazar, Banca Romana pentru Dezvoltare (Romanian Development Bank – BRD) president told a banking seminar. “The concession of Unit 3 will most likely be granted to a company where the suppliers might hold stakes, so that they could gain precedence later. The State will provide certain top-up guarantees for the completely unpredictable situations. The State will, of course, have to have control over this company, even if it holds only one third in it. It must have a golden share or a statutory stipulation, because it is not common practice to leave a nuclear power plant out of the State’s control,” Baltazar said. The bank president added the Government had proposed BRD and its parent bank, Societe Generale, to draft a project finance plan without any security from the State. Collateral for project finance covers only 10%-15% of the investment value on the average and the main condition of the lender is to have the project generate enough cash flow to cover the interest and the principal. More than 90% of the total financing obtained by this method target public-private partnerships, with the local or central authorities granting the concession of a public utility company to a specific firm in view of modernisation and development. ZF