BULGARIA GOVT ASSUAGES FEARS OVER POWER UTILITIES SALE REVISION

BULGARIA GOVT ASSUAGES FEARS OVER POWER UTILITIES SALE REVISION

A day after Bulgaria's prime minister warned the privatisation deals with the three main power distributors may be revised, a deputy economy minister has assured this scenario will hardly unfold.

The U-turn is due to an agreement that Economy and Energy Minister Traicho Traikov has reached with Czech CEZ, German E.ON EONG.DE and Austria's EVN on the payment of a dividend to the state, which holds a 33% stake in them.

“The dividends will bring some BGN 250-300 M into the state budget,” Traikov's deputy Maya Hristova told bTV on Thursday morning, adding that under the privatization contracts the power distributors are entitled to a 12% profit.

“The government will not allow the situation to deteriorate to such an extent that a revision of the contracts to become a must. That's the reason why no calculations have been made on the damages that the state would have to pay in this case,” Hristova stressed.

Meanwhile the head of Bulgaria's State Commission for Energy and Water Regulation (DKEVR) Angel Semerdzhiev confirmed that that the three main power suppliers Czech CEZ, Austria's EVN and German EON buy electricity from state power utility NEK at lower prices than NEK itself.

"The prices have been fixed by the commission last summer and a check is currently underway,” Semerdzhiev commented.

The comments come a day after Prime Minister Boyko Borisov warned that the government is considering the annulment of the privatization contracts with the three main power suppliers Czech CEZ, Austria's EVN and German EON.

“I never came to understand why Bulgaria had to sell the electricity distribution companies in the first place,” Boyko Borisov said on Wednesday, adding that those who signed the unfavourable contracts will have to face the music.

According to data, cited by the prime minister, the National Electricity Transmission Company purchased electricity at a price of BGN 90 per MWH, sold it to the power utilities at a lower price, which charged the end users BGN 146 per MWH.

“This practice will be brought to an end, whatever the price. Why should Bulgarian citizens purchase electricity at BGN 146 per MWH, while Bulgaria exports it to Serbia, Greece and Turkey at a price as low as BGN 68? Have you ever seen anywhere anything like that? What are the economic and financial arguments?,” Borisov fumed.

The prime minister accused the power suppliers of paying no dividends to the state and insisted that they provide concrete figures about the investments that they have made in the country.

The privatisation of a 67% stake in Bulgaria's power utilities was carried out in 2004 by the centrist government of Simeon Saxe-Coburg.

Germany's EON, Czech CEZ and Austrian EVN were three of the five strategic investors which bade for the seven electricity distribution companies, grouped in three equity pools.

The pool for Western Bulgaria comprises the power utilities in Sofia, Sofia-municipality and Pleven. Southeast Bulgaria pool includes Plovdiv and Stara Zagora power utilities. The pool for Northwest Bulgaria contains the power utilities in Varna and Gorna Oryahovitsa.