The problems in the Bulgarian energy sector are due to the fact that the Bulgarian Energy Holding (BEH) did not perform the tasks of a strategic company for what purpose it was established, but because it solved short-term financial problems of the companies united under the union's umbrella. This was explained by the caretaker Minister of Energy Andrey Zhivkov when presenting the state of the companies in the sector. According to the Minister, this pattern of behavior leads to a debt spiral, from which a bad outcome is inevitable.
Moreover, as it became clear from the explanation, BEH has undertaken another practice - requiring a double dividend from the winning companies in the person of Kozloduy NPP and ESO. The result is BEH's liabilities of BGN 2.5 billion. As an example, the Minister gave NEK's liabilities of over BGN 2 billion to the holding and the Bulgarian state, which have not been repaid, but have only been renegotiated.
"The other example is TPP Maritsa Iztok2, which is in critical condition due to the growth of carbon emissions," Zhivkov said. The company's liabilities are BGN 580 million, and this affects the condition of the Mines (Maritsa East Mines), he specified.
"In general, this chain BEH-TPP" Maritsa Iztok2 "-Mini" Maritsa Iztok "is moving without solving the problems," said Andrei Zhivkov.
In order to keep the companies under its umbrella, BEH has undertaken the practice of taking a double dividend from the winning companies. "As BEH seizes additional dividends from the winning companies, the problem is transferred from the sick to the healthy head. For example, Kozloduy NPP has paid an additional dividend of BGN 200 million in 2019, and BGN 270 million in 2020, the minister said. According to him, the same practice has been applied to the Electricity System Operator (ESO), from which a dividend of BGN 50 million has been taken twice. According to the Minister, the system operator has explained that if this practice continues the investment activity of the company will be endangered, which is also related to the implementation of market mergers.
The Minister also expressed reservations regarding the activity of Bulgartransgaz regarding the project for expansion of the gas transmission system (Balkan Stream). As an example of these doubts, he referred to the data that the project is worth BGN 2.6 billion, but as a result of its construction Bulgartransgaz's liabilities to suppliers have increased from BGN 4 million to BGN 1 billion 125 "We have reason to doubt the profitability of the project as it is presented to the public," said Minister Zhivkov, later specifying that he meant the purchase of the pipeline for a period of 10 years.
The Minister of Energy also pointed out as a problem the difficult condition of Bulgargaz due to the obligations of Toplofikatsiya Sofia. This in turn creates a problem for the gas company's payments to Gazprom and, consequently, the purchase of natural gas. For example, Andrey Zhivkov pointed out that the assigned liabilities from BEH to the Sofia District Heating reach the huge BGN 760 million. We are aware of the public functions performed by the district heating company, but there is no program to solve the problems, he said.
The end result is that BEH's liabilities cost us 100m euros a year, the minister said.
The bad policy of the Bulgarian Energy Holding has even led to the fact that now in the preparation for the new refinancing bond campaign of 550-600 million euros there is no large image guaranteeing company. However, no problems are expected under the already initiated procedure, it became clear from the explanations. "As long as there is no strategic approach, this problem will continue. We will take steps to rehabilitate the system, "said Deputy Energy Minister Alexander Nikolov.
Energy policy, or rather the lack of it, has led us to this situation. There is no solution to the most serious problems, the minister said. He is committed to the new team working to achieve financial stabilization of companies and require optimization programs. Where refinancing is required, it will only be done with a specific program.
The Minister also assured that work is being done to unblock some stagnant projects, as well as to include more projects in the Recovery and Sustainability Plan, as the three currently present are insufficient. In this regard, he pointed to cross-border power lines, as well as the construction of an interconnection pipeline with Greece (the IGB pipeline). Specifically for the Bulgarian-Greek connection, Minister Zhivkov promised to check the construction activities and the faster construction, so that the commitment to complete the gas pipeline by the end of the year and start in July 2022 will be fulfilled.
Castling is not expected at least at this stage. The Minister of Energy assured that where the competitions for the management of the companies are stopped, they will be renewed and care will be taken to ensure transparency of the selection procedures. He clarified that "there are quality people among the candidates."