US-based ContourGlobal on Thursday hailed the deal it had signed with the government in Sofia ahead of the planned change in the electricity purchase agreement for its Bulgarian power plant.

“The signing of the Heads of Terms agreement ahead of the planned amendments to the ContourGlobal Maritsa East 3 (CGME3) power purchase agreement is a significant milestone in the process of returning the Bulgarian electricity sector and its participants back to financial health and eliminating the large receivable that had been built up to CGEME3”, ContourGlobal Executive Vice President Garry Levesley said in a statement.  

The agreed immediate payment of some EUR 165 M to the coal-fired power plant reflects the full amount owed to ContourGlobal Maritsa East 3 by Bulgaria’s National Electricity Company NEK and will permit the plant to pay its lignite suppliers EUR 60 M, “thereby helping reduce the mutual indebtedness currently endemic to the sector,” Levesley said. 

NEK signed agreements with ContourGlobal Maritsa East 3 and US-owned coal-fired power plant AES 3C Maritza East 1 on Wednesday, under which it will pay BGN 1 B (EUR 500 M) less than originally agreed to the two plants for the energy they produce over the next 10 years.

NEK and the two power plants signed a memorandum of understanding in February allowing for a decrease in the purchase price of electricity they generate to allow the state-owned company to repay outstanding debt amounting to around BGN 800 M. 

“For many years, NEK has been operating under an annual fiscal deficit that was not addressed by previous Governments, so we are very pleased to work with the current administration as it takes steps to bring about the recovery of the sector,” Levesley said. 

ContourGlobal is the majority owner of the 908-MW ContourGlobal Maritsa East 3, one of the four thermal power plants in the Maritsa East lignite coal mining and energy producing complex in southern Bulgaria.