The Bulgarian Energy Holding (BEH) received a loan from an international banking consortium to the tune of EUR 535 million. However, the total indebtedness of all state-owned companies, which are part of BEH, amounts to over EUR 2 billion. The National Electric Company is the state company with highest levels of indebtedness and most of the money is owed to the two US-owned thermal power plants in Maritsa Iztok Energy Complex - over EUR 250 million.

Is the new loan beneficial to the energy holding and is it enough to cover its debts? These questions stirred heated debates in the energy sector and the media, because all businesses and households practically use electricity and are interested in the energy prices in this country.

The financial crisis in Bulgaria's power engineering field occurred long time ago. The state companies incurred losses over the years due to bad management, excessive expenditures and unrealistic prices. These issues are of social significance as well, because nearly one-third of the Bulgarians receive energy allowances from the social services due to their inability to pay their energy bills. The households mainly receive electricity allowances, because electricity is widely used for heating, too. That is why the first cabinet of Premier Boyko Borissov resigned three years ago, following large-scale street protests against the high electricity bills. It seems that Premier Borissov, who is again in charge of the Bulgarian government, drew conclusions from these events. He made efforts and found a way to keep the price of electricity at reasonable levels.

It turned out that the expensive electricity in Bulgaria is mostly due to the money paid to the two modernized US-owned thermal power plants in the Maritsa Iztok Energy Complex. Following long and tiresome negotiations with these power plants, the state authorities managed to renegotiate the contracts and reduce the prices of these plants’ electricity. However, the state owned National Electric Company had to pay off its debts to the two thermal power plants first. It took the National Electric Company almost six months to persuade the consortium of international banks to extend a new loan without a state guarantee.

Fortunately, this saga was finally brought to an end and BEH received the loan necessary to cover its debts. Initially, BEH applied for a bigger amount, but the money granted by the international banks will be enough to pay the two US thermal power plants. Thus, these power plants will be able to pay the state-owned mines which supply them with the necessary quantities of coal. There is more good news - the Bulgarian Energy Holding has just announced its financial results for 2015, which are very encouraging, because the company registered a small profit for the first time in many years. However, the money surplus will not be enough to cover the interest rates calculated on the new bank loan. The annual interest is twice bigger than the profit registered by BEH last year. However, the company avoided bankruptcy and is safe for now. It has enough time to look for alternative decisions and ways to take the state power engineering out of the crisis. The new loan is only a right step forward.

English version: Kostadin Atanasov