Bulgaria, EVN Yet to Share Out Stakes in Hydro Project - Min

Business » ENERGY | July 30, 2010, Friday // 18:17
Bulgaria: Bulgaria, EVN Yet to Share Out Stakes in Hydro Project - Min The Arda river nearby south-eastern Bulgarian town of Kardzhali. Photo by BGNES

Bulgaria’s economy minister has tried to assuage opposition fears over a deal that granted Austrian utility EVN a majority stake in a hydro project on the Arda river, known as Gorna Arda.

“The stake of state power utility NEK, the other partner in the joint venture, is yet to be decided,” Minister Traicho Traikov said at a press conference on Friday.

The statement came in response to accusations by Bulgaria's former prime minister and Socialist leader Sergey Stanishev, who earlier in the day slammed the agreement, saying it was not clear why the energy company EVN was selected without a competition for an investor and constructor of Gorna Arda project.

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.

The Austrian utility will get the stake after a capital increase of the joint venture company of up to EUR 2 M.

“The capital of the company will most probably be increased to BGN 1 B and it will be after this step that a decision on the share-out of stakes between EVN and NEK will be taken,” the minister explained.

He added that the Austrian company was selected without a contest because there was no need for such.

“The shares were transferred from the previous partner, Turkey’s Ceylan, to EVN,” Traikov said.

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, which holds a 67% stake in one of Bulgaria's three power distributors and serves clients in Southwestern Bulgaria, the sole partner of NEK.

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.

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.

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Tags: NEK, Gorna Arda, EVN, Sergey Stanishev, CCG, Traicho Traikov
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