It is evident that the problems in Bulgarian power generation are now so pressing that their resolution can no longer be postponed even by a month, after this weekend Prime Minister Boyko Borissov himself cautioned that “unless an immediate solution is found by June, there is no way we can pull power generation out of its state of collapse.”

Liberalization and privatization are the medicines that can, according to the government, pull the state energy sector in Bulgaria back to its feet. That this sector is ailing is something the whole of society agrees on, even the political forces. The electrical industry has accumulated some EUR 2 billion in debt, which according to Energy Minister Temenuzhka Petrova the National Electricity Company is simply unable to pay up. Nonetheless, the state-owned company is accumulating more and more debts, producing an excess of electric power but selling it below its prime cost. Gas supplies, which too are state-controlled, have reached the stage when no bank is willing to grant Bulgargaz any credit, because of the company’s dubious solvency. The problems have accumulated over many years, the energy minister admitted at the presentation of the report on the first 100 days of the second Borissov cabinet.

The first and most urgent step towards saving the most heavily indebted National Electricity Company is to somehow find the money to pay up its debts. But this will only be a temporary measure unless it is accompanied by radical and swift reforms. Most pressing is the need to liberalize the electricity market and to privatize the Bulgarian Energy Holding which runs the state sector in the country’s power generation. The revived idea of a partial privatization of 15-20 percent of the holding has been pulled back into the limelight by the Energy Ministry which says it is still working on it, making the necessary calculations and analyses. It is as yet unclear whether state bonds will be put up on the ailing Bulgarian Stock Exchange or on some other more prestigious and solvent exchange abroad. Until all this becomes clear urgent measures must be taken which, in the year of local elections must not push up the end price of electricity. The first of them will be applied by the end of next month – they envisage excluding the electric energy for industrial thermo power plants and central heating plants which is too expensive, from the end cost of electricity. Contour Global, as majority owner of the 908 MW Maritsa East 3, has confirmed it willingness, by signing a Memorandum of Understanding (MOU), to enter into discussions with the state owned company National Electricity Company (NEK) regarding possible amendments to the long term contract under which it sells power to NEK. The energy ministry also envisages legislative amendments in the sale of green certification as well as austerity measures for the state-owned energy companies. Preferences for green energy producers and suppliers will be curtailed considerably.

A liberalization of the electric energy market by the end of the year – this is the second “medicine” from the government’s life-saving prescription for the state energy sector. This means consumers will be able to choose their electric energy supplier. This is something Brussels has been demanding for a long time with Sofia constantly coming up with excuses for postponing the solution of this problem. Not that this will do away with the danger of an inevitable rise in electricity prices, but it will at least give a choice how much and whom to pay.

To save the state energy sector from imminent disaster, the authorities are relying heavily on a controversial idea – that of turning Bulgaria into a gas hub for Central and Eastern Europe. To achieve this, the government is doing everything it can to speed up prospecting of the oil and gas deposits thought to exist on the bottom of the Bulgarian Black Sea economic zone.

English version: Milena Daynova