Promise: BGN 140 million will be received as compensation by household gas consumers

Governments consider changing Bulgargaz's management

Energy / Bulgaria
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Compensation of household consumers of natural gas will amount to BGN 140 million for two months - December 2021 and January 2022. This was announced by the Minister of Energy Alexander Nikolov at a briefing today. For December, the aid will be BGN 26.77 per MWh, and for January - BGN 42.31 per MWh, according to estimates by the Ministry of Energy.

The compensations will start to be paid immediately after a decision of the Council of Ministers, which must be taken after a complete clearing of the details next week, as well as a notification to the European Commission, it became clear from the explanations of the Minister of Energy.

"The structure for the compensations, which we will offer as far as natural gas is concerned, is 50% of the price increase, based on the EWRC decision for the price per MWh, which is BGN 48.80. Thus, the estimates show us that only within the first two months the compensations that will be received from the end users will amount to BGN 140 million ", Nikolov explained.

As previously announced, the estimates we have made with the Ministry of Finance provide a resource of nearly BGN 200 million and, as you can see, most of it will be spent in the first two months. The goal is, firstly, to give some air to the public and to all those who heat with natural gas, and secondly, taking into account market dynamics, we believe that the need for compensation after January will decrease, "said Nikolov.

Electricity compensation for businesses is also yet to be finalized. The offer is for BGN 250 per MWh, it became clear from Nikolov's words.

"The ceiling that we will offer as a net amount will be BGN 250 per MWh, ie no more than BGN 250 per MWh. Roughly, this corresponds to the initial estimate, which is 30% of BGN 750, but at the moment this will not be achieved accordingly, "he said. The Minister recalled the talks with the business from before, providing compensations at the price of electricity of BGN 750 per MWh. According to him, the decision is made because the government wants to maintain the competitiveness of business and to control inflation.

The Minister clarified that there is a difference in terms of compensation for electricity and natural gas.

"The notification for the electricity from the caretaker government has been submitted. The amount is clear for December. We continue with the current notification. The change with the changed ceiling will be valid from January. We will submit a new notification after a decision of the Council of Ministers.

Due to the fact that the market is changing extremely dynamically, we remain in dialogue with business. We are reviewing the entire system. There will be a meeting with the critical companies under the auspices of BEH, so we can be sure that the repair and investment system will not be affected. We will monitor the Electricity System Security Fund, but yes, for now we keep this structure with a ceiling of BGN 250 per MWh - no more than 75% of the growth of what was set. The only change is that the ceiling is not 30% of the price, but a fixed amount as a maximum. This will give businesses predictability for their operating costs, from our point of view will control the budget and costs and we will be able to make a relatively accurate view of what resources will be needed for the energy system. "

In his statement to the media, the Minister of Energy expressed an opinion that Bulgargaz and the Energy and Water Regulatory Commission have not taken the necessary steps to protect the public interest in the price of gas. For this statement Alexander Nikolov referred to Ordinance 2 of the EWRC, in particular to Art. 17. According to him, if all the rules had been followed, the increase would not have been 30 percent but a little over 5 percent.

"This means that for us both the management of Bulgargaz and the EWRC decision had enough tools to offer a different mix for a regulated and free market. January, as part of the winter period is the most energy intensive for all companies involved in heat. Accordingly, in terms of costs to society, this is the most critical month and with high volumes, "Nikolov argued.

If, regardless of whether Bulgargaz or EWRC had taken steps to follow the logic of these members, namely to follow the protection of society to the highest degree to the protection of the public interest in the use of long-term resources and contracts, as well as Chiren, by Bulgargaz could lead to a price for a regulated market, which means all end users, end customers and district heating companies of 107 levs and 60 cents. This is shown by our internal estimates, explained the Minister of Energy. This means that the increase for the month of January could be as an approved proposal by the EWRC 5.15%, "said Minister Nikolov. The Minister himself is the principal of the Bulgarian Energy Holding, part of which is Bulgargaz.

Asked exactly how this amount was calculated, Nikolov said that "the current mix of Bulgargaz includes three main elements" - long-term contracts with Gazprom Export with the Azerbaijani company and the possibility of using the gas storage facility in Chiren. "When, on the basis of the declared household consumption, the resources with the lowest price are used in the most efficient degree and are included in the respective mix, this price is obtained," he said, adding that he could not provide more additional details. them. " According to him, this was not done.

Nikolov also questioned the mixing of Bulgargaz's activities as a public supplier with that of a trader. "The function of a public supplier and mixing it with a trader is, to put it mildly, strange and leads to mixing the right to represent the state as a public supplier with the right to trade a certain energy resource," Nikolov said. As it became clear from the comment in the future change of the energy law, this will probably be corrected.

The public service function requires an affordable price. He said the company could have filed a "similar request". The EWRC had the opportunity to return one or another request, if necessary. "The function of a trader does not mean that commercial activity comes at the expense of Bulgarian society," the minister said. Currently, the proposal to the EWRC does not include any differentiation between the function of supplier and the function of trader on the free market. In this sense, he drew an analogy between the free market and the regulated electricity market and that of natural gas.

The Minister of Energy did not directly state that the necessary steps will be taken to replace the executive director of Bulgargaz Nikolay Pavlov.

Alexander Nikolov also explained that the energy sector is not in a flourishing state and gave an account of the liabilities of energy companies, but from May 1, 2021, which are in the order of several billion levs. In response to a question, he clarified that there are no outstanding debts.

Earlier, the minister also touched on the gas interconnection with Greece, going back in history and giving details of the delay by the previous government. In particular, according to him, it took three years to receive the grant procedure of 39 million euros, a significant period of time to sign the contract with the EIB, as well as a long period of time at the request of the EIA by the MoEW. Therefore, the contract is 4 years late, the minister said.

"Regarding the speculations about the validity of the contract - the contract is valid and ends with the fulfillment of all obligations by the contractor. And not with a date, "he was adamant about the gas interconnection agreement with Greece.



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