Belarus’s first nuclear power plant has received a US$184mn letter of credit from BelVEB Bank to cover payments for the plant’s construction contracts.

The letter of credit (LC) was issued on behalf of the nuclear power plant (NPP) Construction Directorate in favour of Russian engineering company Atomstroyexport, who will provide the plant’s survey work, design and primary documentation.

The LC will be paid through the state export loan granted by the Russian overnment to the Belarusian authorities under an intergovernmental agreement signed on November 25, 2011.

Vnesheconombank and Bank BelVEB are also acting as the agent banks to service the LC.

In November 2011 it was agreed that Russia would lend up to US$10bn for 25 years to finance 90% of the contract between
Atomstroyexport and the Belarus directorate for NPP Construction.

The nuclear power development project is part of the Belarusian government’s plan to increase its energy supply in an attempt to reduce its reliance on Russia’s energy exports. According to the World Nuclear Association, Belarus imports 90% of its gas from Russia and much of its electricity. The country is aiming for 25-30% energy independence, compared with half that now.

As part of these plans, Belarus is planning to build a 1000MW coal-fired plant, a 2400MW nuclear power plant, four hydropower stations with total capacity of 120MW, as well as wind projects totalling 300MW.

If these plans are implemented, it would bring the share of power-generated Russian gas down to 55% by 2020, from over 80% in 2009. As a consequence, Belarus’s gas demand is expected to increase by one third.

The plant is expected to start operations within the next eight years and more funding is expected to be announced on a continual basis.