Bulgaria faces being taken to arbitration by the Russian contractor Rosatom over the nuclear plant project in Belene as it is likely to miss the July 1 deadline for signing a final agreement for its construction.

Bulgaria has committed to sign an engineering, procurement and construction (EPC) contract for building a nuclear power plant at Belene, Russian Komersant newspaper reported, citing representatives of state-owned Rosatom Corp.

If the contract is not signed by July 1, Bulgaria will be taken to court and obliged to pay EUR 1 B in damages, according to the report.

Bulgaria's energy minister said on Wednesday that the government may be forced to extend the deadline to allow the consultants on the project HSBC, which the government contracted to help it decide whether the planned nuclear plant is economically feasible, do their job.

Bulgaria's main electricity utility NEK and Russia's state-owned Rosatom Corp. have been in talks since the beginning of the month on extending an accord to build a 2,000 megawatt nuclear plant on the Danube, in the north of the country.

A scandal erupted after the head of the national utility company NEK Krasimir Parvanov signed 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 sneaky move sparked heated debates in Bulgaria and led to Parvanov dismissal, even though it is still an open question whether the signed document is legally binding.

Safety concerns by the European Union forced Bulgaria to shut four reactors at its sole nuclear power plant at Kozloduy as a condition for its accession in 2007.

Left with only two 1,000-megawatt blocs in operation at Kozloduy, Sofia re-launched long-stalled plans to build two new 1,000-megawatt reactors at Belene.

Opponents have criticized the flimsy arguments behind key aspects of the Belene project, which have raised doubts about the real reasons behind Bulgaria's enthusiastic pursuit of a nuclear future, primarily lack of debates about its final cost and lack of assessment by the consultants on the project HSBC.

The plant was originally to be built by Russian company Atomstroyexport, a subsidiary of Rosatom, for EUR 4 B. The firm had signed a contract with the previous, Socialist-led government, swept from power by Borisov's conservative GERB party swept in the 2009 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.

Sofia insists it will pay no more than EUR 5 M.