Sofia District Heating is starting negotiations with the state for compensation for the expensive natural gas

The district heating company is starting negotiations with the Ministry of Energy, BEH and Bulgargaz due to the high prices of natural gas. Sofia municipal councilors today instructed the Sofia-based company to start negotiations to find a way to offset these increased fuel costs. A negotiating team should be selected to hold meetings with the responsible institutions together with District Heating , it became clear today during the extraordinary meeting.

The Sofia Municipal Council (SMC) instructs the company to submit requests for the inclusion of Sofia District Heating in compensatory mechanisms to reduce losses, conduct negotiations with the Electricity System Security Fund, as well as study any other possibility for financing by the state budget. All municipal councilors supported the petitioners' report, with the exception of Boris Bonev, who voted against.

The negotiations will include the chairman council of SMC, members of the board of District Heating, the deputy mayor for finance of the Sofia municipality. At the suggestion of the municipal councilor and one of the submitters of the report, Greti Stefanova from Democratic Bulgaria, the SMC accepted the idea in the draft decision, as part of the negotiations to include the provision of energy benefits for all energy-poor households in Sofia.

The text of the decision states that SMC "selects a negotiating team with the task of conducting negotiations with the competent state authorities in connection with the achievement of fair compensation for" Sofia District Heating "in order to reduce losses of the company and provide energy assistance to all energy poor households on the territory of the Sofia Municipality ". This includes not only the consumers of District Heating, but also all other consumers who use different energy sources, explained during the discussions in the hall the Deputy Chairman of the GERB group in SMC Nikolay Stoynev.

The modernization of District Heating is the key to get out of the spiral in which we are limited between the regulatory framework and the debts of the past. This was stated during the meeting by Alexander Alexandrov, Executive Director of Sofia District Heating. "There is talk of the loss that District Heating is forming. I will pay attention to 3 digits. In 2019, when I and the current management took over District Heating, the loss was BGN 87 million for 2020, the loss was reduced to BGN 67 million. In our business plan for 2021, a loss of BGN 21 million was expected. or on an operational basis this would give a profit of between BGN 10 and 11 million.

Then came the tsunami called change in energy markets. All that is probably happening to us, to others in Europe, all over the world. Unfortunately, this is already out of control, much more than what we as a leadership can achieve, much more than what the markets can calm down. I do not expect markets to calm down any time soon. These are things we need to consider. You know that we live in a heavy regulatory framework. I agree that the regulatory framework as defined may perhaps provide a better allocation or rebalancing of SMCial cost-taking. By no means do I want to be misunderstood that District Heating  wants a price increase. We understand that the price that the people of Sofia pay is difficult enough for them, especially in the devastating economic crisis in the pandemic situation. Like everyone else in business, we seek help and assistance in the country, "Alexandrov explained.

"Regarding the impossibility to reach an understanding on the part of Bulgargaz, what we managed to negotiate on the free market, the deferred payment, the truth is that the changes we have made are significant. In the end, the only thing we failed to achieve was a change in what Bulgargaz provided as conditions. "I will not hide from you that at the end of last year we signed the contract with Bulgargaz, until then we tried to make any agreements, but we met a wall on ourselves," complained Alexandrov.

"In addition to the current values ​​we have for gas, the management of District Heating traditionally manages about 30% of the costs, we currently manage 3% of them. The ratio of the value of gas to the value of the service we provide is 97%. This does not provide many opportunities. We are doing everything possible to optimize these costs, "he added.

"Everything takes time. I hope step by step we get to where we are going. If not us, then those after us should continue what we started. "The modernization of District Heating is the key to get out of the continuous spiral in which we are limited between the regulatory framework and the debts of the past," he explained.