Valentin Nikolov: Compensation for business for expensive electricity will cost between BGN 600 million and 1.2 billion

The increase in the price of gas by 36.22%, approved yesterday by the EWRC, will be felt immediately by household gas consumers. But this also applies to chemical plants, fertilizer plants, because about 60-70% of the price of their production is related to the price of blue fuel. This was explained on the air of Nova TV by the executive director of BEH Valentin Nikolov. He added that in the next month or two new prices are expected.

At the same time, from January 1, there will certainly be an increase in the price of heating. Nikolov explained that the increase will depend on the EWRC, but in their forecasts for the last adjustment of district heating prices, they have underestimated the expected increase in natural gas prices by between 5 and 10%. Therefore, from the New Year the increase in the price of heating specifically in Sofia will be over 20 percent. As here, the reason is not only the rise in the price of blue fuel, but also the carbon quotas. He also expressed hope that the price of heat will not increase by 50%, as heard.

From Nikolov's words it became clear that the price of gas in our country could not have increased so much if our interconnection with Greece was ready. But due to the delay in its construction, we cannot receive the entire amount of gas from Azerbaijan, which we have agreed and which is at a lower price. He reminded that the promise at the moment is that the pipeline will be completed by the end of this year and in the middle of next year it will be able to start operation. He personally expressed skepticism about this promise, but also hope to make mistakes.

Regarding the delay in the construction of the interconnector, he explained that the Bulgarian side in the person of BEH, which owns 50% of the project company ICGB, has fulfilled its commitments, providing all the necessary funding. The other two shareholders, Italy's Poseidon and Greece's DEPA, have chosen a contractor in the form of another Greek company, Avax. From the latter comes the delay in construction. For its delay, of course, there will be penalties, but they will be calculated at the end of the contract. However, Nikolov noted that the contractor is currently claiming force majeure given the COVID crisis, due to which work is delayed.

The head of BEH said that it is possible that after January 1 the price of electricity for household consumers will remain unchanged and that he hopes this will happen. In this regard, he noted that Bulgarian household customers currently, although they find it expensive, receive cheap electricity compared to European markets nearly 3 times. And BEH is the one who subsidizes this energy. But he did not deny that it is possible that the forecast for a 20% jump in household prices next year will come true. "It is realistic, unfortunately, if the current prices on international markets are maintained, and most likely they will be maintained for many reasons," Nikolov said.

It also became clear from his words that in a colder winter Bulgaria may have a problem because there is no replacement power if one stops working for some reason. And he gave an example with the current situation in which one unit of Kozloduy NPP is switched off for scheduled repairs and this is already felt in the electricity market, because 1000 megawatts of power is not small at all. At the same time, there is a shortage of electricity in our region. Nikolov also noted that in general we have no way to stop the export of electricity. The only such opportunity is available to the Minister of Energy in case of force majeure by issuing such an order, but in that case everything must be very well thought out and justified, because otherwise criminal proceedings will be initiated against Bulgaria.

Nikolov also said that he is most worried about the cold winter, because we no longer have replacement capacities - the so-called cold reserve as all plants operate. "All companies are ready to work in the winter, I'm just worried that we don't have a reserve. And everyone in the region is counting on us. "If any power fails, the minister will most likely have a reason to stop exports, because there will be no way to sustain our system," Nikolov added.

He said that in any case, there will have to be compensation for business due to high electricity prices. The question is where will this money come from. But in any case, the money available to BEH will not be enough to compensate possibly with the currently offered BGN 50 for each megawatt hour for business consumers in our country. For this reason, other sources must be sought. "For now, the finance ministry is looking for such an option," he said. Nikolov also confirmed that these BGN 50 in question will be state aid, which is why there must be a permit from the European Commission. He also explained that Brussels had not yet approved such compensation in any of the Member States and that it was not true that it had allowed Spain and Greece to provide such compensation, but that they had only requested permission to apply such measures at the moment.

Regarding the required amount, if these BGN 50 for megawatt-hour compensations for business are approved by the state, Nikolov explained that in 6 months this would cost about BGN 600-700 million, but if a decision is made to support non-profit consumers for the whole price period, then you will need about 1.15-1.20 billion levs. "We are looking for funds from international markets, where the credit rating is very important, as well as how the bondholders view the sustainability of BEH," he said.

Regarding the coal power plants in our country and the negotiations with the EC when they will be closed, Nikolov explained that Brussels does not want us to close the TPPs, but only to stop mining coal. Because these plants can work with other types of fuels - biofuels, gas, which is a transitional fuel. He added that so far no one has told Bulgaria when it should stop using coal, but only to extract. But he admitted that indirectly we are under pressure to give them up. And he gave an example with the refusals for financing, which BEH has received from large corporations, because in the portfolio of the holding there is "Mini Maritsa-East", ie. coal mining.