The financial position of Bulgaria’s National Electricity Company (NEK) is worsening and its debt already exceeds BGN 3.1 B, caretaker Energy Minister Vasil Shtonov has said.

On Tuesday, Shtonov told the first meeting of the newly-formed Energy Board that additional expenses relating to the arbitration case with Russia’s Atomstroyexport over Belene nuclear power plant or bigger losses can push the state-owned company into insolvency.

In addition, domestic electricity consumption is likely to decline in the next few years with fewer households using electricity for heating, which will put additional burden on NEK’s finances.

A period of excess capacity is expected, Shtonov said in his analysis.

The state-regulated segment of Bulgaria’s power market has lost BGN 360 M in the first half of the year and the problem is going to worsen with the expected decrease of the volumes sold on the regulated market. The loss is expected to top BGN 900 M in the year to June 2015, said Shtonov.

“The main task before the energy board is to stabilize the energy sector and guarantee predictability within it,” he added.

Highlighting that raising power prices alone will not resolve the problems in the sector, Shtonov said that an analysis of investments in energy projects needs to be made to avoid price hikes that consumers find impossible to pay.

Established as a consultative body with the government, the Energy Board  has to analyze the state of Bulgaria's energy sector and to look into reasons for its instability. The board comprises government officials, business representatives, the energy watchdog DKEVR, consumer organizations and trade unions.

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