Energy Minister Temenouzhka Petkova Friday told reporters she was resigning after the sale of CEZ Group's Bulgarian business to a Bulgarian company whose owner has been Petkova acquaintance for long years. Petkova said: "I believe that when there is the least doubt about issues, influences or intervention, it is best to resign. The Prime Minister will decide what to do next."
Inercom Bulgaria, based in the southern town of Pazardjik, bought the package of seven CEZ companies for 320 million euro, according to unofficial reports.
On Thursday, CEZ Group stated in a press release that "the fourteen-ye in its Bulgarian operations yielded an overall positive return".
CEZ Distribution Bulgaria supplies electricity to nearly 3 million customers in Western Bulgaria, including the capital. In 2016, CEZ Electro Bulgaria and CEZ Trade Bulgaria sold 9.7 terawatt hours of electricity to final customers, according to the company's site.
Asked if she was in any way connected to Inercom, Petkova said she had known its owners for 20 years and Prime Minister Boyko Borissov had advised her to resign on Friday morning. She added the Bulgarian government was not involved in any way in the sale which had been arranged according to Czech legislation. "CEZ did not ask Bulgaria for an opinion before the deal," she added.
Talking to reporters in Brussels, Borissov said he would not want to leave even a shadow of a doubt that the government was involved in a 100 per cent private deal.
The Prime Minister said: "The [three] governments I have led have not had good relations with CEZ. Let my remind you that the first cabinet fell after the billing period was deliberately extended and people had to pay large bills."
He added that the energy regulator, the Commission for Protection of Competition, the Financial Supervision Commission and the State Agency for National Security (SANS) should have their say before the deal is finalized.
Delyan Dobrev, Chair of the parliamentary Energy Committee, is concerned whether the buyer has the capacity to manage the company. "News reports say that this company has assets for 90,000 leva and made a 11,000 leva loss last year. And all of a sudden they acquire for 300 million euro the [Bulgarian] business of CEZ: a turnover of 2 billion leva, close to half of customers in Bulgaria and a third of the network," he said. He added that the CEZ turnover is 2 per cent of Bulgaria's GDP.
He also expressed a hope that the energy regulator and the antitrust commission would check the buyer, and quoted Economy Minister Emil Karanikolov as saying that SANS was likely to run a check on Inercom.
Approached by reporters in Parliament, Finance Minister Vladislav Goranov said that his Ministry is not competent to audit a deal between private entities and that only the regulators can step in.
According to the investigative journalism website bivol.bg, Inercom Bulgaria is one of four companies with "Inercom" in their name, all of them owned by Inercom Investment. The journalists have checked the commercial register and found out that they have a total staff of 20 people and each has a capital of 50,000 leva, or just over 25,000 euro. Both Inercom Investment and Inercom Bulgaria are owned by Ginka Vurbakova. The Inercom companies reportedly own three solar power plants.
"Capital Pro" writes that last year the companies in the CEZ group in Bulgaria increased their profits. The increase was 23 per cent (to 30.58 million leva) for CEZ Distribution and the more impressive increase from 864,000 leva to 36.34 million leva for CEZ Electro. Most of the increase comes from "other revenue" but the report does not say exactly what that was.
The expectations for the sale of the CEZ companies have affected the price of their shares and those of CEZ Electro appreciated by 37 per cent in 2017 and of CEZ Distribution by 16 per cent. The market capitalization of the two companies is 130 million and 530 million leva, respectively.
The opposition Socialist party issued a declaration saying that the government should take out 320 million euro - the alleged price of the deal - and buy back the Bulgarian business of CEZ and "regain control on national security". Socialist leader Kornelia Ninova called upon the National Ombudsman, the President, "all state institutions and the civil society" to stand up for the national interests.
She also said that Prime Minister Borissov is personally responsible for this transaction.
Volen Siderov, the floor leader of the United Patriots, which is the junior partner in the government coalition, told reporters in Parliament that the government is the only authority which can deal with the CEZ deal.
Inercom Bulgaria said in a press release on Friday that it had been selected as the buyer for all of the assets of CEZ a. s. in Bulgaria. The share purchase agreement was signed between companies from the corporate group of CEZ and Inercom Bulgaria on 23 February 2018. The transaction will now be notified to the Bulgarian Competition Protection Commission for its approval and will only be closed thereafter.
The companies subject to the transactions are: CEZ Bulgaria EAD, CEZ Electro Bulgaria AD, CEZ Distribution Bulgaria AD, CEZ Trade Bulgaria EAD, CEZ Information and Communication Technologies Bulgaria EAD, Free Energy Project Oreshets EAD and Bara Group EOOD.
Inercom Bulgaria EAD, a special purpose vehicle, incorporated for the purpose of the transaction with CEZ, a. s., is part of and is fully supported by a large group of companies that have been developing for over 10 years in the field of energy, energy infrastructure and construction. The main part of the group's activity is related to the production of electricity, design, construction and operational management of power plants from renewable energy sources.