Ministry of Regional Development and Public Works: The high price of electricity leads the water supply and sewerage companies to bankruptcy

The country's state-owned water companies are facing bankruptcy due to high electricity prices and a lack of understanding on the part of the Energy and Water Regulatory Commission, which refuses to take action to protect operators, despite existing legal provisions. This became clear at the third working meeting between the Ministry of Regional Development and Public Works and the Commission. It was attended by Deputy Minister of Regional Development and Public Works Valentin Gramatikov, Atanas Paskalev - Adviser to the Regional Minister, Kancho Kanchev - Executive Director of Bulgarian Water and Sewerage Holding EAD, representatives of the Union of Water and Sewerage Operators in Bulgaria and others. On behalf of the EWRC, the meeting was attended by the Chairman - Ivan Ivanov, as well as the members Penka Trendafilova, Dimitar Kochkov, Remzi Osman, the Director of the Water and Sewerage Services Directorate in the Commission Ivaylo Kaschiev and others. This was announced by the press center of the Ministry of Regional Development and Public Works.

Deputy Minister Valentin Gramatikov reminded that the problems in the water supply and sewerage sector are serious and a situation will soon arise in which companies will simply not be able to perform their functions. "There are indications that there will be problems with the price of electricity since the summer, but no measures have been taken by the regulatory body," said Deputy Minister Gramatikov and reminded of the letters and meetings on the issue. "The possibility of the new business plans coming into force on January 1 is zero. That's why we need a new price now, "he said.

The director of the Water and Sewerage Holding Kancho Kanchev also warned about the dramatic situation in the sector and noted that the electricity prices do not correspond in any way to the estimates set in the current business plans of the companies. Currently, the companies under the auspices of the Water and Sewerage Holding pay an average of over BGN 303 more for electricity, compared to the price of BGN 82 approved in the business plans. Due to the huge difference, they are indebted with over BGN 18 million to electricity suppliers. "Almost all electricity distribution companies have issued letters threatening to cut off electricity if water and sewerage operators do not pay," Kanchev admitted. According to him, if no measures are taken, there is a risk that electricity debts will jump to BGN 140 million.

The manager of Vik-Vratsa Angel Prestoyski warned that about 20 companies are threatened with insolvency, which means bankruptcy. In this situation, they will not be able to serve the population in a number of settlements. "Six months ago, we alerted the EWRC about the problems that will be on the agenda immediately after the increase in electricity. "Until measures are taken, there will be no companies, we will all resign," he openly admitted.

The manager of the Water and Sewerage Company in Vidin, Georgi Vladov, has warned of another problem - the increase in the minimum wage from January 1 next year. Thus, in addition to unaffordable electricity bills, companies will have to find funds for higher wages, ie. more deficits. "We need a new price from January 1. We have reached the bottom. "People will start leaving work and in the end we will remain only the heads of the water companies, who will lock the door when they go bankrupt," Vladov said. According to him, the bankruptcy of the water supply and sewerage operators carries a risk of failure of the projects under the Operational Program "Environment" for repair and modernization of the water supply and sewerage networks. The state will lose billions and the chance for new networks. According to him, there are delays in adopting business plans. In addition, the provisions of the legislation, which has clear deadlines for this activity, are not observed.

Adviser to Minister Komitova - Atanas Paskalev, sees three options for overcoming the crisis. The first is to start Art. 19 of the Law on Regulation of Water Supply and Sewerage Services. It regulates the procedure for price revision to be opened by the commission ex officio or at the request of water and sewerage operators when an unforeseen or unavoidable extraordinary event occurs, which significantly changes the revenues and economically justified costs of water and sewerage operators. The second is to speed up the procedures for adopting the business plans of the operators and the third is to reduce from 6 to 3 months the deadlines that take into account the costs of forming the prices of services.

According to EWRC Chairman Ivan Ivanov, the only chance to deal with the situation is the introduction of a compensatory mechanism by the state. According to him and the EWRC experts, the application of Article 19 of the Law is impossible, as there is currently a procedure for approving the new business plans of the companies, which are set different from the current prices. And they predict an increase in wages in the industry, as well as reflect new electricity prices. However, it is not possible to say how soon these plans will be adopted.

EWRC member Remzi Osman is of the opinion that urgent legislative changes are needed to solve the problems.

"The meeting was completely pointless. We have consulted with lawyers in connection with the application of Art. 19, and if the regulator wishes, it can apply this action from January 1 until the entry into force of the new business plans ", Deputy Minister Gramatikov addressed the people from the EWRC.

He reminded that EWRC has not yet approved any business plan of a water company, although they have been submitted since the end of June 2021. The chance of this happening by the new year is zero. "The activation of Art. 19 and a new price from January 1 is the only way to avoid the problems. Of course, we will also look for a compensatory mechanism ", the Deputy Regional Minister summed up.