Bulgaria Socialists Alarmed over EVN Stake in Hydro Project

Energy | July 30, 2010, Friday

The Gorna Arda hydropower project is expected to cost around EUR 500 M, which should be paid by the consortium. File photo

Bulgaria's former prime minister and Socialist leader Sergey Stanishev has slammed an agreement under which the Austrian utility EVN got a majority stake in Bulgaria hydro project on the Arda river, known as Gorna Arda.

“It is not clear why the energy company EVN was selected with no competition at all for an investor and constructor of Gorna Arda project,” Sergey Stanishev said in parliament on Friday.

Earlier this month Austrian utility EVN signed a deal with Bulgaria's state power utility NEK to take a majority stake in the Bulgarian hydropower project. Under the agreement Austrian utility EVN will own a 70% stake, while NEK will hold the remaining 30% in the joint venture.

“NEK has invested much more funds in Gorna Arda than EVN,” Stanishev argued on Friday, adding that according to initial estimates the cost per megawatt will stand at EUR 3 M, which is even higher than the cost for Bulgaria's second nuclear power plant project at Belene.

The agreement for the construction of Gorna Arda hydropower project in southern Bulgaria, between Austria’s energy firm EVN and Bulgaria’s dominant state power utility NEK was signed during the visit of Prime Minister Boyko Borisov in Vienna in the middle of July.

Austria's Alpine Bau withdrew from the construction of Gorna Arda hydropower project in the middle of May, leaving energy firm EVN the sole partner of NEK.

Austria's EVN, which holds a 67% stake in one of Bulgaria's three power distributors and serves clients in Southwestern Bulgaria, has assured that the shareholders overhaul will not delay the project and promised that it will press for speeding it up in a bid to secure green energy for its clients in the region.

At the beginning of September 2009, Bulgaria’s new government sealed a letter of approval for the construction of the hydro power project on the Arda river, known as Gorna Arda (“Upper Arda”).

This was a requirement for wrapping up of the sale of a 30,1% stake, owned by Turkey's CCG, part of the Ceylan conglomerate, to an Austrian consortium of EVN and Alpine Bau.

The move was made after a trial in the International Court of Arbitration, in which Ceylan Holding filed claims for EUR 75 M against the other member in the joint venture - Bulgaria's National Electric Company NEK, was suspended for three months.

The Turkish company was contracted to implement the project under an electricity-for-infrastructure swap deal Bulgaria and Turkey signed in 1998, during the term of the government of Ivan Kostov. The launch of the hydropower construction was delayed after the Turkish company ran into financial troubles.

The Gorna Arda hydropower project is expected to cost around EUR 500 M, which should be paid by the consortium. It is planned to have an electricity production capacity of 160 MW.