Deputy Finance Minister Vladislav Goranov announced on national radio that the country would not go ahead with plans to build the Belene nuclear station near the River Danube.
Bulgaria depends on Russia for 89% of its petrol, 100% of natural gas and all of the nuclear fuel needed for its Kozloduy nuclear power station which has two functioning reactors.
It is presumed that the decision results from a telephone call between Bulgarian Prime Minister Boyko Borrisov and his Russian counterpart Vladimir Putin, held the previous day. The Russian government website only announced that energy projects have been discussed between the two leaders.
Besides Belene, Russia has interest in building the South Stream gas pipeline project and the Burgas-Alexandroupolis oil pipeline on Bulgarian territory (see background). The oil pipeline project is reportedly on hold.
Goranov provided no details except to say that a Russian nuclear reactor commissioned for Belene would be installed at Kozloduy. He added that Bulgaria had to pay a final €100 million instalment for the reactor, and that the country would build a natural gas-powered electricity plant at the Belene site.
Borissov recently argued that since Bulgaria had already paid two-thirds of the reactor's price, the best solution was to pay the outstanding amount and to make use of the unit.
The decision may appear as surprising, because Britain's HSBC bank, the Bulgarian government consultant on the Belene project, had not yet announced its conclusions on the feasibility of the plant.
Roumen Ovcharov, an opposition MP and former energy minister in several Socialist governments, called the move "stupid", adding it would require a new licencing procedure for Kozloduy, and that the new reactor would become operational only in 2030.
"Some members of the government, and I think even the prime minister, understand that the Belene project is in Bulgaria's interest, but unfortunately in the cabinet there are people who get influenced by some embassies, including the American one," he added.
Dnevnik's internet site was overflowing with opinions welcoming the decision, although some commentators noted that Borissov has often changed his mind on many occasions.