Association of district heating companies signals the danger of bankruptcies of natural gas district heating systems

Association of district heating companies in Bulgaria signals a spectacular problem caused by the lack of compensation for the high prices of natural gas for district heating companies and other users of the raw material.

"We are extremely concerned about the worsening financial condition of the district heating plants that use natural gas as their main fuel. Unfortunately, coal-fired power plants that are investing in a partial transition to natural gas in the coming months may also have similar problems. The main reason for the companies' economic problems is the rising price of blue fuel. We are shocked by the forecast of a 54% price increase for the month of August. If accepted, it follows that there is a 150% increase in the forecast price of natural gas for the third quarter.

Uncertainty about the future supply of the main fuel of these companies also poses a huge problem for their operations in the coming months. In a conversation, some of the directors stated to me that they will suspend payments to natural gas suppliers due to financial impossibility," said the chairman of the Association of Heating Companies in Bulgaria, Eng. Kremen Georgiev.

The Association explains that for the period 01.07.2021 - 30.06.2022 a Program for compensation of natural gas users was in effect. The support was in the form of a fixed amount calculated per Mvtch.

"A compensation program for June for domestic consumers, industry and heating utilities was not foreseen. It seems that there won't be any in July either, because the month has passed and the matter has not even been discussed. "Due to the lack of assistance from the state and the continued increase in the price of natural gas, the companies themselves have to bear the additional costs," said Engineer Kremen Georgiev.

The expert explained that they will require EWRC to review the new regulatory framework for prices, which has been in effect for only a month, but no longer reflects what is happening on the market and is completely out of date.

"The stated reasons are likely to lead to bankruptcies of energy companies very soon," said the chairman of the Association of Heating Companies in Bulgaria, engineer Kremen Georgiev.

The expert pointed out that several Bulgarian cities may be left without heat supply even before the start of the heating season due to a serious risk of decapitalization of the respective heating companies, which will put them in a situation of impossibility to carry out their investment and repair programs.

"In the event that such a scenario occurs, unfortunately the companies in question will not be able to fulfill their license obligations. In the event of financial bankruptcy of gas district heating systems, significant problems will arise both for the public supplier, who will not be able to collect its debts, and for the national electricity system due to the need to switch all affected consumers to providing heating and hot water through electricity . The power transmission network is not designed for such a load and will not withstand it," said Engineer Kremen Georgiev.

According to the expert, the customers of heating systems should not bear the burden of the increased prices of natural gas, but the state.

The President, the Prime Minister, the Speaker of the National Assembly, the Minister of Finance, the Minister of Energy and the Ombudsman have been referred in writing to the problem of the lack of compensation and the danger of mass bankruptcies in the sector.