State aid for BGN 1.6 billion is provided by the government with the acquisition of debt of "District Heating Sofia"

New state aid for BGN 1.6 billion granted by the government for the debts of "District Heating Sofia" to BEH and "Bulgargaz". The Council of Ministers adopted a Decree approving changes to the budget of the Ministry of Energy for 2024 and a Decision to adopt measures and settle relationships in the Energy sector.

The Decree approves changes to the budget of the Ministry of Energy for 2024 for additional payments of up to BGN 1.6 billion. The purpose of providing the funds is the acquisition of receivables of BEH EAD and Bulgargaz EAD from District Heating Sofia EAD under order and up to the amount, according to Art. 108 of the Law on the State Budget of the Republic of Bulgaria for 2024. The transaction does not affect the state budget deficit.

With the Decision, the purchase of the above-mentioned receivables from "District Heating Sofia" EAD is assigned, thus providing conditions for guaranteeing the security of natural gas supplies, as well as expanding the possibilities of BEH EAD to support the activity and financial stability of its subsidiaries, in order to guarantee the security of the energy system. This remains the main priority of the holding, the government information service explains.

The Decision of the Council of Ministers resolves a number of issues in the Energy sector, the most important of which is the provision of funds in the Electricity System Security Fund, with the aim of covering the operational deficit of the fund and providing funds for the implementation of the Program for the Provision of compensations for enterprises that pumped natural gas into the Chiren Gas Plant, after the approval of the Program by the European Commission.

The Minister of Energy, Rumen Radev, explained the meaning of the Decree and the Decision of the Council of Ministers to the media, explaining what kind of case is being resolved with these actions: "We have huge liabilities from District Heating Sofia to the energy sector for gas supplies over the years. The accumulation of these liabilities was transferred by "Bulgargaz" EAD to "BEH" EAD, which led to the liabilities of the heating company to the state holding. The rest, which continued to grow over the years, was accumulated as balances to Bulgargaz. This practice leads to the impressive (total) sum of about BGN 1.6 billion in liabilities to the "BEH" EAD group.

These funds can be used to solve liquidity issues in the energy sector, implement investment programs, etc. This liquidity has been seized from the sector. With this Decree of the Council of Ministers, we are returning this liquidity". Minister Radev emphasized in his speech that we are not talking about a change of ownership of District Heating Sofia EAD, which remains a municipal company. The debts of the municipal enterprise to the state are acquiring colossal proportions. The procedure is a type of state aid and in all probability will have to be approved by the European Commission, familiar experts remind 3eNews.

The financial situation of "District Heating Sofia" also remains unclear, since the company has not published its reports for the last two financial years.