Bulgaria still wants to join the euro zone despite recent predictions that the single currency will collapse, Traicho Traikov, Bulgaria’s Economy Minister, told CNBC on Thursday.

“I know now it’s fashionable to predict the end of the monetary union, but I think common sense will still dominate and it is going to survive. Of course, in the end we want to be a part of it,” Traikov said.

“Ever since we introduced a currency board in 1997, our focus has been on keeping the fundamentals right, so we ran government surpluses for most of these years,” he explained.

“For us, being a part of the euro zone means lower interest rates on credits for business,” Traikov said.

CNBC points out that Bulgaria is the poorest EU member state but that its “tough reforms” have helped it achieve one of the smallest debt to gross domestic product ratios in the European Union and a budget deficit of around the Maastricht-agreed 3% of GDP ceiling.

The US TV further stresses the fact that Bulgaria has the lowest corporate tax in the EU at 10%, and that the government in Sofia remains firmly opposed to the introduction of a single tax rate in the euro zone even as Germany has proposed greater fiscal integration within the euro zone in order to avoid a situation where prudent countries end up paying for the profligate.

“For us, coordinated fiscal policy does not include coordinated tax policy,” Bulgaria’s Economy Minister told CNBC.

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A newly-discovered natural gas deposit near Lovech in Northern Bulgaria contains 10 billion cubic meters of gas, Bulgaria’s Minister of Economy, Energy, and Tourism announced.

Traikov said that Bulgaria will soon be able to extract about 1 billion cubic meters of natural gas per year, or about one-third of its annual consumption.

He spoke Tuesday night without providing details about the deposit near Lovech but he apparently referred to an area around the village of Deventsi in central northern Bulgaria explored in the recent years by Direct Petroleum, a US-based company.

According to the estimates of the bidders, the deposit near Novi Pazar contains between 300 billion and 1 trillion cubic meters of shale gas. In Traikov’s words, Bulgaria’s shale gas deposits should be able to guarantee its domestic consumption of natural gas for the next 1000 years.

It is still unclear when the extraction of the mentioned natural and shale gas deposits in Bulgaria can be materialized. At present Bulgaria’s natural gas consumption is about 3 billion cubic meters per year, and 90% of that is imported from Russia. The rest comes from the development of the Kaliakra deposit in the Black Sea by UK company Melrose Resources.

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The Bulgarian government has signed a consulting contract with UK-based company HSBC for the financial analysis for the project for the construction of the Belene nuclear power plant.

Bulgaria‘s Cabinet and Prime Minister Boyko Borisov in particular have made it clear that the results from HSBC’s financial appraisal of the Belene project, i.e. whether it is economically feasible, will be decisive with respect to the government’s final decision on whether to go ahead with the project whose price has been a bone of contention with the selected executer, Russian state corporation Rosatom.

Bulgaria will be paying HSBC EUR 2 M for its services plus 0.95% of the end price of the Belene NPP if it is realized, according to media reports confirmed later on Tuesday by Bulgarian Economy Minister Traicho Traikov.

This means that if HSBC declares the Belene NPP project to be economically feasible, and it is constructed, it will get a fee of EUR 47.5 M if the plant costs EUR 5 B.

Subsequently, Vladimir Karolev, an economist, who according to Traikov, is working with HSBC in Bulgaria, explained for the Dnevnik daily that the non-flat fee that HSBC will get will be 0.95% of the foreign investment capital attracted for the project, which can come from anywhere, including from the Russian state corporation Rosatom.

The Bulgarian government’s contract with HSBC itself was sealed late Monday night via fax, according to the Ministry of Economy, Energy, and Tourism.

The HSBC experts will be doing their work on the financial appraisal of the project for Bulgaria‘s second NPP in London but are also expected to visit Bulgaria within the two-month deadline that they have to complete their work as last Bulgaria‘s National Electric Company NEK and Rosatom subsidiary Atomstroyexport signed a 12th annex to their expired agreement stipulating that a decision about the fate of the Belene project should be arrived at by June 1, 2011.

The consulting company is supposed to analyze the project thoroughly and advise the Bulgarian government regarding its final price as well as its potential restructuring. Under the consultancy contract, HSBC is also supposed to participate in the search for strategic investors for Belene as efforts of the Borisov Cabinet have not proven very successful in that regard.

The Bulgarian Energy Holding, the parent company of NEK, picked in November 2010 HSBC, one of the world’s biggest banks, for a consultant to help it decide whether the project is economically feasible.

Six candidates had submitted documents to bid in the tender opened by the Bulgarian Energy Holding for Belene consultant – HSBC, Societe Generale, KPMG in a consortium with McGuire, Rothschild, Argil, and Ernst & Young.

“With this step the project enters a crucial stage. The conclusions of the consultant will be the answer to the question whether or not Belene nuclear power plant will be built,” Bulgarian Economy and Energy Minister Traicho Traikov said on Sunday regarding the signing of the consultancy contract with HSBC.

The statement comes just days after Traikov drew the ire of Prime Minister Boyko Borisov after he slammed and dismissed the National Electric Company head Krasimir Parvanov for signing an agreement with Rosatom‘s subsidiary Atomstroyexport that potentially threatens Bulgaria‘s national interests by obliging the Bulgarian government to reach a final agreement with the Russians on Belene by June 1, 2001.

The plant was originally to be built by Russian company Atomstroyexport for EUR 4 B, plus “escalation costs” including inflation and other factors – a condition accepted by the Stanishev Cabinet (2005-2009); the Borisov Cabinet, however, has demanded a firmly set price from the very beginning apparently afraid that the Russians might demand more money using the escalation costs clause.

The firm had signed a contract with the previous, Socialist-led government, swept from power by Borisov’s conservative GERB party swept in last year’s July elections.

Due to the delays in the launch of the construction works, stalled over price disputes and funding problems, Russia now says the project construction price should be increased to EUR 6.3 B, while Bulgaria‘s government has been haggling for a price as low as EUR 5 B.

Bulgaria‘s new center-right government suspended the construction of the nuclear power plant last year until it finds a new investor and funds to complete the project at Belene, on the Danube, 180 km northeast of the capital Sofia.

In November 2010, shortly after a visit to Sofia by Russian PM Putin, Bulgaria‘s National Electric Company NEK and Russian state company Rosatom signed a memorandum providing for a final fixed price for the two reactors of EUR 6.298 B.

According to the non-binding memorandum expiring on March 31, 2011, Bulgaria‘s NEK will have a share of 51% in the Belene NPP, Rosatom – a share of 47%, Finnish company Fortum – a share of 1%, and French company Altran Technologies – a share of 1% with an option to increase it. Serbia has expressed interest in acquiring a share of 5%-10% but the talks for that have not been finalized yet.

After it was first started in the 1980s, the construction of Bulgaria‘s second nuclear power plant at Belene on the Danube was stopped in the early 1990s over lack of money and environmental protests.

The Belene NPP was de facto frozen in the fall of 2009 when the previously selected strategic investor, the German company RWE, which was supposed to provide EUR 2 B in exchange for a 49% stake, pulled out.

In mid-March 2011, apparently acting on concerns caused by the situation in Japan‘s Fukushima NPP after the recent devastating earthquake there, the European Commission confirmed that it wants to reexamine the Belene NPP project – once Bulgaria finds an investor for it – even though it already approved it back in 2007.

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