Bulgaria Energy Minister Rules Out Nationalization of Power Distributors

February 18, 2013, Monday // 10:45
Bulgaria: Bulgaria Energy Minister Rules Out Nationalization of Power Distributors
Bulgarian Economy and Energy Minister Delyan Dobrev has said that a nationalization of power distributors, which has been proposed to appease public discontent with high electricity bills, is out of the question. Photo by BGNES

Bulgarian Economy and Energy Minister Delyan Dobrev has said that a nationalization of power distributors, which has been proposed to appease public discontent with high electricity bills, is out of the question.

In a Monday interview for Nova TV, Dobrev explained that the only step that could be taken in the case of a breached license of a power distributor was the withdrawal of the permit, adding that it could only happen on the basis of solid evidence.

He noted, however, that the step would not cause energy costs to decrease.

Bulgaria's Economy and Energy Minister, as cited by the 24 Hours daily, emphasized that power bills could only drop as a result of strict control.

He further vowed that all energy contracts which had not yet been published would be made available online.

"The government believes in actions, not words. The legal amendments should be in place by the end of the week. It is easy to say that the people will not pay damages for terminated contracts but there is no way that this can happen because there is nobody who can cover these costs. If a violation is detected, a procedure for revoking the license of that power distributor will be launched," he said.

Dobrev made clear that the State Commission for Energy and Water Regulation (DKEVR) had initiated proceedings on a report of the Public Financial Inspection Agency (PFIA) on the inspection at power distributor CEZ.

Bulgaria's Economy and Energy Minister informed that DKEVR was to come up with a decision on the need to launch proceedings for the withdrawal of the license of CEZ, which supplies power to over 2 million households and companies in western Bulgaria, including the capital Sofia.

Dobrev informed that the two other power distributors, EVN (southeastern Bulgaria) and Energo-Pro (northeastern Bulgaria) were also being inspected and the reports were due in 20 days.

He added that the procedure for revoking the license of a power distributor lasted about a month.

Tens of thousands of disgruntled Bulgarians rallied on Sunday across the country to demand the expulsion of foreign-controlled power distributors controlling the local market.

The demonstrators called for a nationalization of the power distributors by February 22.

The mass protests against high power and heating bills in Bulgaria have been going on for over a week.

In 2004, the Balkan country sold 67% in its three power distributors to Germany'sE.ON, Austria's EVN and Czech CEZ.

E.ON served households in North-Eastern Bulgaria, including the Black Sea city of Varna. Czech power utility CEZ supplies power to over 2 million households and companies in western Bulgaria, while EVN serves the southeastern parts of the country.

At the beginning of December 2011, German electric energy company E.ON struck a deal to sell its Bulgarian unit E.ON Bulgaria to private Czech company Energo-Pro.

Experts repeatedly called on the Bulgarian government to launch high-quality initial public offerings to bring back to life the capital market, dented by low liquidity and lack of quality stock, as well as to boost revenues.

That's why the sale of the minority stakes in the electricity distributors on the stock exchange was a must-do task for 2012.

The Bulgarian state made a total of BGN 115 M from the sale of its minority shares in Czech-owned power utility CEZ Bulgaria on the Sofia Stock Exchange at the end of last year.

Bulgaria's privatization body formally declared the successful end of the sale of the state-owned shares of CEZ Bulgaria on the Bulgarian Stock Exchange, which took a week to materialize even though the deadline was November 29, 2012.

Bulgaria has thus sold all of its 33% stakes in two newly listed local power distribution companies controlled by Czech power firm CEZ.

Bulgaria had sought to rake in at least BGN 104.3 M from the sale of the government's minority stake in CEZ local power distribution units.

It offered 63 624 shares in power distributing unit CEZ Distribution Bulgaria and 1650 shares in grid operating unit CEZ Electro Bulgaria. The minimum price per share was set at BGN 1415 and BGN 8660 respectively.

The sale of the two power distribution companies controlled by Czech electricity producer CEZ brought to an end Bulgaria's privatization of its 33% minority stakes in all three power distributors.

Bulgaria had before that sold its minority stakes in power distributors controlled by Czech Energo-Pro and Austrian EVN for BGN 67.6 M and BGN 93 M respectively.

Both companies acquired the bulk of the capital of its two units in Bulgaria right after the trade with their shares started on the local stock exchange, boosting their 67% stakes held before the launch of the sale.


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