Bulgaria Hopes to Revise Contracts with AES, ContourGlobal Units by end-March Bulgaria hopes to renegotiate by end-March its contracts with US-based AES Corporation and ContourGlobal for the purchase of electricity from their power plants AES Maritsa East 1 and ContourGlobal Maritsa East 3, Energy Minister Temenuzhka Petkova has said. Under contracts signed more than a decade ago Bulgaria's National Electricity Company has been purchasing electricity from the two thermal power plants at prices higher than the average market prices paid to other producers. Bulgaria's energy watchdog DKEVR in May 2014 sought changes to the contracts with the two power plants. AES owns a majority stake in Maritsa East 1, while ContourGlobal is majority owner of Maritsa East 3. Darik radio quoted Petkova as saying on Tuesday that urgent measures were needed to address the deficit at the National Electricity Company which exceeded BGN 3B. An audit was underway in the energy sector and checks were carried out in all energy companies, Petkova added. At present negotiations were being held with AES Corporation and ContourGlobal which have expressed support for the initiative of the Energy Ministry. Petkova expressed hope that a positive outcomes of the negotiations will become evident soon.
Source: Sega (21.01.2015)

US-Owned TPPs Agree to Cut their Electricity Prices Bulgaria's National Electric Company (NEK) has signed memorandums with each of the two US-owned coal-fired electric power plants in the Maritsa Basin, AES Maritza East 1 and ContourGlobal Maritsa East 3, under which the long-term agreements on purchase of the electricity generated by the plants will be renegotiated and its price will be reduced, Energy Minister Temenouzhka told a news conference here on Friday. For its part, NEK guaranteed that it will pay its overdue debts to the two power plants. "We hope that the renegotiation on the terms and conditions for the long-term purchase of the electricity produced by the plants will be finalized by the end of March 2015," Petkova said.
Source: Standart (23.02.2015)

Bulgaria grid operator inks landmark changes to contracts with American TPPs Bulgaria’s National Electricity Company (NEK) inked an agreement on changes to the long-term contracts with TPP AES Maritsa Iztok 1 and TPP Kontur Global Maritsa Iztok 3 on Wednesday. The papers were signed by Executive Director of the National Electricity Company (NEK) Petar Iliev; Chief Commercial Officer of AES Bulgaria Ivan Tsankov; and Garry Levesley, Chief Executive Officer of TPP Kontur Global Maritsa Iztok 3. The signing ceremony was attended by f Bulgarian Prime Minister Boyko Borisov and Minister of Energy Temenuzhka Petkova. “We agreed on cutting the price of available electricity, which the National Electricity Company (NEK) is obliged to purchase during the entire period of the contracts. The total decrease, which we managed to agree on, is 30% for both contracts,” Bulgarian Minister of Energy Temenuzhka Petkoca said after the signing ceremony. “This is a serious step forwards in the attempt to save the energy sector from the financial collapse it finds itself in. The price cut is not bound to extension of the deadlines of the contracts,” the minister explained. “The general effect, which we expect the NEK to realise until the expiration of the contracts, is around BGN 1 billion, or in other words the company will manage to save around BGN 100 million a year as a result of the renegotiation of the contracts,” Temenuzhka Petkova said further. She added that NEK agreed to pay off its debts to the American partners. “Today is one of the important days for the Bulgarian energy sector because the need of looking for options for revision of the long-term contracts with the American partners has been discussed for two years. Our government managed to renegotiate the conditions in the contracts in just a few months,” the minister remarked. “Currently the National Electricity Company (NEK) owes around BGN 700 million to the two American plants,” Temenuzhka Petkova said. “One of the debts is of BGN 300 million to TPP Kontur Global Maritsa Iztok 3 and the other – BGN 388 million to the TPP AES Maritsa Iztok 1,” the minister remarked. “Things should happen by the end of June. NEK does not have any resource to pay off these debts. What we achieved with the American partners is connected with decrease of the availability price. I do not want anyone to expect that this will affect the electricity price. This will allow NEK cut the deficit and keep the price in some way,” Minister Petkova said further. “We will secure a credit that will allow us to pay off the debts owed to the two American power plants,” Minister Temenuzhka Petkoca said. “Today’s agreement will come into force by June 30. The loan in question has nothing to do with the BGN 16 billion state debt. This will be a credit which the Bulgarian Energy Holding (BEH) will take to make it possible for NEK to pay its debts,” the minister explained. “We had the vision that Bulgaria will be the Switzerland of the Balkans,” said Julian Nebreda, AES Corporation President for Europe. “The country has much potential and opportunities. Electricity will be one of these competitive advantages. We believe that this is a positive step and it requires much of work in the future. The negotiations were hard but we reached an agreement because we place trust in the government of this prime minister, and namely – that it will stabilise the sector,” Nebreda remarked. He commented that while signing the contract the company was certain that the government would successfully implement its programme and that there would a stable energy sector soon. “This will be one of the engines that will give a push to Bulgaria for becoming Switzerland of the Balkans,” Julian Nebreda remarked. “I am happy that I witnessed the signing of this agreement,” US Ambassador to Bulgaria Marcie Ries said. “These two companies together make the biggest American investment in Bulgaria. We hope that the signing of these agreements will contribute to the establishment of positive image for the business environment in the country and will attract more American investors in Bulgaria,” the Ambassador remarked.
Source: Duma (09.04.2015)

Bulgaria's Mini Maritsa Iztok gets 25.6 mln euro loan Bulgarian coal mining complex Mini Maritsa Iztok has signed a BGN 50 million loan agreement with two banks, local media reported. The coal mining company will use the proceeds from the loan to partly cover its debts to suppliers, state-owned Bulgarian National Radio reported on Tuesday, quoting Mini Maritsa Iztok's executive director Andon Andonov. Under the agreement, the loan will be repaid by the state-owned Maritsa Iztok 2 thermal power plant (TPP) which in turn owes the coal mining company BGN 59.2 million. According to Andonov, the Bulgarian units of US companies AES and ContourGlobal owe Mini Maritsa Iztok a total of BGN 206 million, and local power producer Brikel owes it a further BGN 47 million. AES operates the Maritsa Iztok 1 coal-fired plant in Galabovo and ContourGlobal operates the Maritsa Iztok 3 TPP. Earlier this month the two companies agreed with state-owned power utility NEK on a decrease by 14% and 17%, respectively, in the capacity price for electricity produced by their coal-fired plants in the southeast of the country. For its part, NEK will pay all arrears to the two companies amounting to a total of BGN 700 million. These agreements, however, have no bearing on the US companies' debt to Mini Maritsa Iztok, Andonov said.
Source: mediapool.bg (15.04.2015)

Check at AES Maritza East 1 TPP Finds Gross Violations of Public Procurement Act For 2013 and 2014, the AES Maritza East 1 TPP did not conduct even a single public procurement award procedure under the Public Procurement Act (PPA), which is the most serious possible violation of that law, Public Financial Inspection Agency Director Ventsislav Georgiev told the media here on Thursday. Georgiev was given a hearing at a closed-door meeting of the National Assembly Ad Hoc Committee of Inquiry to Audit and Assess the State of the Energy Sector in the Republic of Bulgaria by January 31, 2015. "We draw a distinction between serious violations and procedural violations, e.g. a failure to send information when due, a failure to release a guarantee, etc.," Georgiev explained. "A contracting authority's failure to conduct a procurement award procedure under the PPA is the most serious possible violation," he pointed out. The pecuniary penalty envisaged in the law for this violation starts from 15,000 leva, the Director specified. Written statements ascertaining administrative violations have been drawn up and served on the TPP, and it can lodge objections within the statutory time limit. Asked how he accounts for the fact that the power plant did not award any public procurements, Georgiev commented that up to a time AES Maritza East 1 was not a contracting authority within the meaning of the law, but after it became an electricity producer, it was bound to start to award public procurements but failed to do so. "I hope that after our check AES will already identify themselves as a contracting authority by virtue of the law," Georgiev said. The check of the AES Maritza East 1 TPP was completed in April, which is why its results are not included in the report on checks conducted in the first quarter of 2015. That earlier report covers the results of checks at the ContourGlobal Maritsa East 3 TPP (the other US-owned coal-fired electric power plant in the Maritsa Basin) and at the Bulgarian State-owned Maritsa East 2 TPP. At AES Maritza East 1, Georgiev's Agency checked 21 public procurements exceeding 9 million leva in value. The inspectors found that five procurement award procedures for over 4 million leva were not conducted or were conducted without justification. Serious violations of the PPA were not found in the Maritsa East 2 TPP, but nine written statements on procedural violations were drawn up.
Source: Duma (08.05.2015)

25% of BEH put on the BSE Bulgaria will offer 20-25% of the shares of Bulgarian Energy Holding (BEH) on the capital markets, Deputy Energy Minister Nikolay Nikolov announced. This will happen after stabilization of the holding, which will facilitate the liberalization of the market, he said. Following the liberalization, BEH subsidiaries will improve their financial results, will refinance their obligations, and through sales of shares will fund modernizations, Nikolov said. Meanwhile, BEH is about to take BGN 800 million government guaranteed loan, Deputy Minister Nikolov said. It will be used to pay the obligations of the BEH’s subsidiary NEK to both US TPPs in the Maritza Iztok complex.
Source: Standart (27.05.2015)

NEK obligations to the two US plants in Maritsa - Iztok grows within the hours, CEO of BEH Jaklin Cohen said during a parliament hearing on the energy situation. Cohen said he led tough negotiations with the plants for final signing of the contracts with which to reduce the cost of availability, which NEK pays. The effect of this measure will save BGN 1 billion for the remaining 10 years of the contract, or BGN 100 million per year. The condition to reduce the price is the payment of NEK’s debt to two companies - AES Galabovo Maritsa East 1 and Contour Global Maritsa East 3. Initially it was announced to be 700 million. Yesterday, Deputy Minister of Energy Nikolay Nikolov said the debt is BGN 800 million and that Bulgarian Energy Holding seeks to draw government loan to be repay the obligations.
Source: Dnevnik (28.05.2015)

Bulgaria’s Maritsa Iztok 2 Thermal Power Plant Reports BGN 28.6 M Net Loss in H1, 2015 State-owned thermal power plant Maritsa Iztok 2 closed the first half of 2015 at a net loss of BGN 28.634 M, compared to a profit of BGN 1.440 M for H1, 2014, according to a report of the company. Although the company registered a profit of BGN 5.186 M for the first quarter of 2015, it warned that its financial result was going to deteriorate due to the decrease in revenues from services to the Electricity System Operator (ESO) such as the cold reserve, according to dnevnik.bg. The main reasons for the downward trend in H1, 2015 are said to be the increased greenhouse gas emissions costs, which the energy watchdog did not include in the calculation of the price for the past 1-year pricing period, and the decrease in revenues from sales of cold reserve quantities. The revenues of the state-owned thermal power plant go up by nearly BGN 10 M in H1, 2015. However, the emission quota costs increased by nearly BGN 19 M and depreciation expenses went up by around 6 M. The total expenses of the company added BGN 28 M in H1, 2015. The net financial expenses increased from nearly BGN 3 M to BGN 16.711 M. At the same time, state-owned Maritsa Iztok Mines closed the fist half of the year at a net profit of BGN 28.063 M, according to the H1, 2015 financial statement of the coal mining company. The profit of the Maritsa Iztok Mines for 2014 stood at BGN 4.340 M. The main reason for the positive development was the increase in sales revenues by nearly BGN 90 M to BGN 296 M.
Source: Capital (05.08.2015)

AES and ContourGlobal thermal power plants and renewable energy producers will remain the primary sources on our energy market, recent data show. The latest data of energy watchdog KEVR show that AES Maritsa East 1 and ContourGlobal Maritsa East 3 set their share in Bulgaria's energy system at 20% and 25.2%, respectively. Renewable energy sources, which currently produce the most expensive energy (and which have been purchased under preferential conditions since the government passed laws to this end in early 2010) form 18.8% of the market. State-owned Maritsa Iztok 2 TPP and Kozloduy NPP have seen a substantial decrease in their respective shares, which now stand at 4.1% and 6.7%. This comes right after the government issued a statement that it would be bringing Maritsa Iztok 2 out of the regulated market. The rest of the energy is generated by heating utilities (16.3%) and the hydropower plant owned by the National Electricity Company (8.75%). Bulgaria is trying to tackle the BGN 3.7 billion debt of the NEC through a number of measures, including an increase in power prices for businesses, as well as to gradually move toward energy market liberalization.
Source: Capital (11.08.2015)

Bulgaria to forego dividend from state energy holding Bulgaria’s Energy Ministry will not seek any dividend from the Bulgarian Energy Holding (BEH) for 2014, using the money instead to bolster the group’s equity capital as it seeks to borrow money to pay back debts owed by its electric utility subsidiary to two power plants owned by US private investors, reports in Bulgarian media said on August 12, citing filings with the country’s trade register. According to the reports, the ministry was due to receive 239.5 million leva, or about 122.4 million euro, in dividend from BEH, the umbrella structure set up by Bulgarian government in 2008 to consolidate state-owned companies in the energy industry. BEH is currently seeking to borrow at least 800 million leva for its subsidiary NEK, the state electric utility, which needs the money to pay back the debts owed to AES Maritsa Iztok 1 and ContourGlobal Maritsa Iztok 3 power plants as part of an agreement under which the two coal-powered plants would reduce the price at which they sell electricity to NEK. (sofia globe)
Source: Sega (13.08.2015)

Mines Maritsa Iztok will ask for a loan of BGN 50 million from Bulgarian Development bank Mines Maritsa Iztok is looking for a chance for a fast loan to the amount of BGN 50 million with direct negotiations. We have been analyzing banks, and it turned out that the only one that may give us money now at the fastest way is Bulgarian Development bank. The money will be purposely directed solely to paying off our obligations to the state and the companies we are working with, Mines Maritsa Iztok’s CEO engineer Andon Andonov said at a press conference on Monday. The state company looks for a bridge funding for BGN 20 million in parallel, with which salaries of employees will be paid. If Bulgarian Development bank renders loan to the mines, it’s will be the second case of huge funding by a state bank, which is otherwise was set up to lend to small and medium-sized private companies. The state company is the second largest corporate employer in the country with its 7130 employees and the largest in the region of Stara Zagora. Money is needed so that three mines are prepared for the autumn-winter season. The company has signed a tripartite agreement with NEC and Brickell, as the settlement between them becomes as follows: NEC settles 90% to Mines Maritsa Iztok and 10% to Brickell.
Source: Capital (18.08.2015)

More than four months after signing an undertaking to pay the huge debt of a little under 900 million leva to the two US-owned TPPs in the Maritsa East basin: AES Maritza East 1 and ContourGlobal Maritsa East 3, the Bulgarian Energy Holding will at last seek a nearly 1,000 million leva loan in a procedure that will be announced in the "Official Journal of the European Union" on August 27, said Energy Minister Temenouzhka Petkova. The loan, which will be without a State guarantee, postpones the reduction of payments to the TPPs until November, even though this was initially expected to happen in July.
Source: Monitor (19.08.2015)

More than BGN 2.4 million collected for 5 days in NEC’s rescue fund Funds are already being accumulated in the fund Security of the electricity system and as of 17th of August raised money reach over BGN 2.4 million. This what energy minister said. Just in a few days between 24th and 31sy of July the sum was accumulated from the 5% tax on sold power. By the end of this year, NEC has to pay off its obligations to AES Galabovo Maritsa East 1 and ContourGlobal Maritsa East 3. Meanwhile, the Cabinet decided yesterday over 130 hectares of forest lands for the expansion of coal mining from the mine Troianovo 1-site 2 will go to the state mines. Mines Maritsa Iztok has to pay BGN 1.2 million for the change of land utilization has, while the price for compensatory afforestation is set at BGN 1.3 million
Source: Monitor (20.08.2015)

US-owned TPP AES Bulgaria Finalizes Agreement with National Power US-owned thermal power plant AES 3C Maritza East I and Bulgaria’s National Electric Company (NEK) have finalized the agreement on amending the long-term contract for purchasing electricity generated by the TPP. The agreement was negotiated in April and it concerns the capacity price of AES 3C Maritza East I, according to a media statement of the US-owned TPP. Once the agreement enters into force, the capacity price will drop by 14%, thereby allowing Bulgaria’s state-owned power utility to save around BGN 50 M a year, or a total of BGN 550 M by 2026, when the contract with the US-owned TPP expires. However, the power purchase agreement (PPA) with AES 3C Maritza East I, as well as the PPA with the other US-owned thermal power plant, TPP "ConturGlobal Maritza - East 3, cannot enter into force before the state pays its debts to the two entities. The state-owned power utility owed nearly BGN 800 M to the two TPPs in April, according to reports of investor.bg. AES 3C Maritza East I informs in a media statement that it will immediately cover its liabilities to the Maritsa East Mines, currently at around BGN 60 M, once it receives full payment of NEK arrears, currently at around BGN 500 M. Bulgaria’s Energy Ministry is still looking into opportunities to take out a loan to pay the two US-owned TPPs.
Source: expert.bg (27.08.2015)

Watchdog OKs Agreement between Bulgaria’s National Power Co, ContourGlobal Maritsa East 3 TPP Bulgaria’s Commission for Energy and Water Regulation (KEVR) has approved the power purchase agreement between US-owned thermal power plant ContourGlobal Maritsa East 3 TPP and the National Electric Company (NEK). KEVR Chair Ivan Ivanov announced Thursday that the agreement signed on August 14 between the two entities on amending the existing PPA had been approved at a closed meeting of the watchdog. Ivanov, as cited by the Focus news agency, said that the move paved the way for the entry into force of the new terms of the contracts with the two US-owned TPPs, ContourGlobal Maritsa East 3 TPP and AES 3C Maritza East I. In order for the two agreements to take effect, Bulgaria’s national power utility needs to pay its debt to the two TPPs first. Ivanov made clear that a tender would be announced via the Official Journal of the European Union for a bank to provide NEK with the resources necessary for the purpose. NEK needs a loan of around BGN 1 B to settle its debts to the two US-owned TPPs.
Source: Capital (28.08.2015)

Business to address Brussels on the electricity issue Bulgarian business sent a complaint to the European Commission because of the electricity issue. The four employers' organizations – CEIBG, BICA, BIA and BCCI, addressed Brussels on breached Community law on state aid. Namely, purchasing electricity by the National Electricity Company from the two American power plants - AES Galabovo and Contour Global - Maritsa East 3. The state buys electricity at fixed prices that are higher than the market prices because of the contract from 2001. Similar findings have also been established by the Commission for Protection of Competition (CPC) in its judgment of 3 July 2013, and by the State Energy and Water Regulatory Commission (KEVR), which also addressed the European Commission. Employers insist that the Commission establishes the infringement and provides information about the procedure on the same signal by KEVR. This will enable the Bulgarian side to renegotiate conditions on purchase of electricity from the two power plants. The four organizations, which plan a large protest against high electricity prices for business on 30 September in Sofia, want a moratorium on the compulsory purchase of electricity at preferential prices.
Source: Standart (14.09.2015)

Fitch Lowers Bulgarian Energy Holding’s Rating to ‘BB-‘ Fitch Ratings has downgraded Bulgarian Energy Holding EAD's (BEH) long-term foreign and local currency ratings one notch to 'BB-' from 'BB'. BEH’s foreign currency senior unsecured rating was also lowered to 'BB-' from 'BB'. The outlook is negative, the rating. The rating downgrade reflects Fitch’s expectations that the BEH group's credit ratios will be weak in 2015-2016, largely due to accumulated power tariff deficit at BEH's subsidiary national Eelectricity Company (NEK). “The rating downgrade is limited to one notch as we expect funds from operations (FFO) in 2015-2016 to improve from low 2014 levels on the back of a smaller tariff deficit at NEK. This is due to various legislative and regulatory changes in 2015 and renegotiation of NEK's long-term power purchase agreements with two thermal power plants, AES-3C Maritsa East 1 EOOD and ContourGlobal Maritsa East 3 AD.” Fitch also said the negative outlook incorporates the agency’s projected FFO adjusted net leverage above the 5x guideline for the current ratings by 2016 before decreasing to below 5x in 2017. The negative outlook also reflects the BEH group's weak liquidity position in light of large overdue trade payables at NEK and also the possible removal of the single-notch uplift for BEH for state support in the next one to two years if most of its new debt is raised without state guarantees.
Source: money.bg (18.09.2015)

Term for seeking of loan for NEC extended Bulgarian energy holding extended the term in which banks that want to lend the state company a loan of EUR 650 million may hand out their offers. The new deadline expires on Tuesday. The energy holding announced the procedure for a new loan on the 17th of September. With the sought EUR 650 million debts of National electricity company (NEC) to the two American thermal power plants – AES Maritsa East ² and ContourGlobal Maritsa East 3 JSC will be covered. They are assessed at BGN 1 billion. That is the requirement if negotiated drop in prices is to enter into force. From them NEC has to save BGN 1 billion in the coming ten years.
Source: Monitor (29.09.2015)

Bulgaria to fully liberalise power market in early 2016 - energy min Bulgaria is scheduled to have a fully operational free power market by the beginning of 2016, the country's energy ministry said on Tuesday. The liberalisation of Bulgaria's power market is a top priority for the government, the energy ministry said in a press release. In the beginning of 2014, the state-owned Bulgarian Energy Holding (BEH) set up the Independent Bulgarian Energy Exchange (IBEX) which holds a licence to operate the electricity exchange in Bulgaria for a period of 10 years. In April, IBEX and power market operator Nord Pool Spot signed a cooperation agreement aimed at setting up a day-ahead power exchange in Bulgaria. In August, the World Bank Group signed a deal with BEH to consult it on the liberalisation of country's energy market.
Source: Capital (30.09.2015)

Employers’ Associations Report Irregularities in Bulgaria’s Energy Sector to Chief Prosecutor The heads of four employers’ associations submitted tip-offs with the prosecuting authority for three types of irregularities in the energy sector. Vasil Velev, Chair of the Bulgarian Industrial Capital Association (BICA), Bojidar Danev, Chair of the Bulgarian Industrial Association (BIA), Tsvetan Simeonov, Chair of the Bulgarian Chamber of Commerce and Industry (BCCI), and Kiril Domuschiev, Chair of the Confederation of Employers and Industrialists in Bulgaria (CEIBG), told Bulgaria’s Chief Prosecutor Sotir Tsatsarov on Wednesday that the elimination of the flaws identified by them could result in a reduction in electricity prices. Tsatsarov, as cited in a media statement of the BIA, reminded the chairmen of the four organizations that a working group including representatives of the Energy Ministry, the State Agency for National Security (DANS), and the prosecuting authority was investigating potential offences in the sector and vowed that the results of the probe would be published in November. One of the tip-offs concerns offences committed by renewable energy plants, including photovoltaic plants which functioned at night and plants from which electricity was bought before their official launch, conflict of interest over the actual ownership of renewable energy plants, and a failure of regulatory bodies to exercise appropriate control and hold the offenders responsible for their actions. The four organizations suggest that the prosecuting authority notify the competent US bodies about the privatization of the two thermal power plants in the Maritsa Iztok Complex, AES-3C Maritza East 1 EOOD and ConturGlobal Maritza - East 3, currently owned by US investors. The tip-off related to the two US-owned thermal power plants says that they concluded unfavorable deals for electricity supplies which also violated EU competition rules.
Source: Sega (01.10.2015)

2 banks apply to give EUR 650 million loan to BEH Two banks have issued applications in the BEH’s procedure of providing loan payment to the American TPPs. In the other procedure for choice of investment advisor on issuing of bonds applicants are 12. This marks completion of the first stage of the two procedures. Thus the second stage is pending. Participants who will make it to the second round will present bounding offers. After opening and assessment of offers economically most advantageous proposal for funding will be chosen. BEH is looking for a loan of EUR 650 million, as part of it will be used by NEC to pay off with AES Maritsa East ² and ContourGlobal Maritsa East 3. Obligations of the state company go over BGN 900 million. If they are not paid, negotiated agreed discount in the price of electricity will not enter into force. In addition NEC will not be able to save BGN 1 billion. This saving is planned to be realized within in the next ten years.
Source: Monitor (07.10.2015)

Bulgarian Employers Urge Price Caps on Power Purchases from AES, ContourGlobal Plants The four nationally-represented employers' organizations in Bulgaria - BIA, BCCI, BICA and CEIB – have asked the government to suspend payments above market prices for electricity generated by AES Galabovo and ContourGlobal Maritza East 3 power plants. The two lignite coal-fired plants, owned by U.S-based AES and ContourGlobal, respectively, are popularly known in Bulgaria as the American power stations. The employers want the government to cap the purchase prices for electricity produced by the two plants at market levels until the European Commission decides on whether payments above those levels constitute illegal state aid, investor.bg reported on Tuesday. Bulgaria’s energy regulator DKEVR asked the EU Commission in the summer of 2014 to state its position on the preferential power purchase prices agreed with the two power plants. The employers associations asked the Commission the same question last month. The heads of the four employers’ associations alerted the Chief Prosecutor’s Office last week about alleged irregularities in the energy sector, including the sale of the two thermal power plants in the Maritsa Iztok coal mining and energy complex to the US-based investors. According to Vasil Velev, Chairman of the Bulgarian Industrial Capital Association (BICA), Bulgaria is granting illegal state aid in the amount of BGN 333 M a year to the two power plants, thus increasing the electricity bills of Bulgarian industrial enterprises, investor.bg said.
Source: investor.bg (14.10.2015)

Miners want smaller coal mining Podkrepa union demanded that the coal production from open coal mines in the state Mini Maritsa Iztok EAD-Radnevo is sharply reduced. It already warned the Ministry of Energy, NEK and ESO that in the next six months they can count on only 14 million tons for the three thermal power plants in the complex. These amounts will go to maintain no more than 2800 megawatts of power, which will require or emergency import of electricity or power cuts. "We are forced to this step because of the huge amounts of abandoned work areas. The danger of collapsing mines and repetition of the spring of 1987, a year when Bulgaria became a huge 'disco’ is real, said the leader of Podkrepa in the company Gencho Genchev . Delay in the disclosure of the layers is due to the difficult economic situation and suspended payments by TPP AES and TPP Contour Global Maritsa East 3. Miners are due BGN 450 million, reminded Dimitar Manolov, president of Podkrepa. It is clear that the state must find a way to buy the assets of both plants. The same idea was announced by CEIBG.
Source: Monitor (15.10.2015)

We are waiting for approval from Brussels for a price ceiling of US power plants Bulgarian government expects the European Commission to recognize the state aid on long-term contracts for the purchase of electricity from the so-called US TPP AES Galabovo and TPP ContourGlobal Maritsa Iztok 3, as well as with the producers of electricity from renewable energy. Actions will be taken on this basis to change the contracts in order to reduce electricity prices for households and businesses. The energy watchdog expects to get a response by the end of the year of the complaint that contracts with both plants, as well with the producers of electricity from renewable energy, are unlawful state aid submitted last summer at the European Commission. According to representatives of the government, there are indications that the EC decision regarding the US plants will be positive and mostly in the section concerning the rate of return on capital, which was 12-13 percent higher than the 12-13 normal on the market. This, combined with the market for trading electricity launching in early 2016, would allow the government to implement the imported days ago requests from employers' organizations to introduce a ceiling on the price of electricity purchased from AES and ContourGlobal.
Source: Standart (19.10.2015)

The loss of the National Electricity Company (NEK) is expected to reach BGN 400 million at the end of the year. In the first nine months the company’s loss was BGN 311 million, said Finance Director of NEK Rumyana Krasteva within the open meeting of the Commission for Energy Regulation (KEVR) to discuss the minimum depreciation of the additive 'obligation to society’ for business from 1 November. According to Krasteva, change of additive 'obligation to society’ will positively affect the state power company. BGN 40.5 million will be saved from the cost of electricity by district heating companies as expectations are for revenues of BGN 35 million for the whole regulatory period. According to Krasteva, however, this will not lead to a lowering of the company's liabilities. NEK’s revenues decreased in August and September as the received revenues are by BGN 10 million less.
Source: investor.bg (27.10.2015)

Banks demand state guarantees for Bulgaria energy loan-sources Plans by Bulgaria's state energy holding company to raise up to 650 million euros ($713 million) in debt have hit a stumbling block after lenders asked for state guarantees, two sources familiar with the situation told Reuters on Thursday. BEH is seeking to raise bridge financing ahead of a bond issue. It has said it has received two binding offers from banks to lead manage the bond issue, without elaborating. The company needs the proceeds urgently to enforce a deal with two U.S. thermal power producers AES and ContourGlobal, under which the two will lower the price at which they sell their output to BEH's unit, public power provider NEK. After 12 banks initially expressed an interest in lending the money and organising the bond, BEH has received two offers. One is from a consortium of Citigroup, HSBC, Unicredit, Societe Generale and ING , while the other is from Banka IMI, the investment arm of Intesa Saopaolo, said the sources, who declined to be identified. The consortium has asked for state guarantees on the 500 million euros it is willing to provide as bridge financing to the bond, which should be issued nine months to a year after a deal is sealed. ADVERTISING Banca IMI has also asked for state guarantees and has offered only 65 million euros without, the sources said. Bulgaria's finance ministry has declined to extend such guarantees before the huge deficits in the energy system are properly addressed. "In this situation, either the finance ministry should agree to provide state guarantees, or BEH should re-launch the process, lifting the threshold of 500 million euros for the bridge financing," the first source said. "If the ministry allows state guarantees, the deal can be signed in a week. If not, all 12 banks, that have expressed (interest as) initial bidders may be invited to file bids again," the second source said. BEH has also sought to arrange a loan with a bank, but has not received any binding offers and has given up on that option. In September, Fitch credit ratings agency downgraded BEH's long term rating to BB- with a negative outlook, predicting weak credit ratios due to a widened tariff deficit at NEK. NEK's total dues have jumped to 3.7 billion levs, leaving a 1.4 billion tariff deficit, Energy Minister Temenuzhka Petkova said last month, pointing out that the deal with AES and ContourGlobal aimed to slash that shortfall.
Source: investor.bg (30.10.2015)

BEH Terminates Open Tenders for Selection of Investment Consultant, Financing Institution The Bulgarian Energy Holding (BEH) announced on its website on Wednesday that it terminated procedures launched on September 3 for an investment consultant and a financing institution. BEH said it "terminated an open tender with pre-selection for the selection of an investment consultant for the issuance of corporate bonds, and an open tender with pre-selection for the selection of a financing institution(s) for raising a loan/syndicated loan." On November 12, Energy Minister Temenouzhka Petkova told Parliament's Energy Committee and Committee on supervision of the energy and water regulator that BEH would decide on that day to terminate the procedure for selection of bank institutions which can provide a loan for dealing with intercompany obligations in the energy sector. Instead, direct negotiations would be held in the next two or three weeks with the banks which showed an interest in the procedure. The National Electricity Company (NEK) needs the loan to pay off its debt of nearly 900 million leva to US-owned AES Maritza East 1 TPP and ContourGlobal Maritsa East 3 TPP, which themselves owe close to 350 million leva to the Maritza East Mines. This will make possible the entry into effect of an agreement on a 100 million leva annual reduction of the price that NEK pays the US-owned TPPs for availability. Twelve of the world's largest banks have shown interest on condition the loan is government-guaranteed. BEH and the Energy Ministry will negotiate with them to provide the required financial resources of 650 million euro.
Source: Monitor (19.11.2015)

Bulgaria Expects Offers for EUR 650 M Loan to Energy Holding Co. in 2-3 Weeks The Bulgarian Energy Holding company has invited potential lenders to extend a loan of up to EUR 650 M, BNR radio broadcaster reported on Monday. Deputy Energy Minster Zhecho Stankov told reporters on the sidelines of a gas conference in Sofia that invitations had been sent to 25 international financial institutions and loan offers were expected to be submitted within two or three weeks, according to BNR. Stankov, who is also BEH board member, said he hoped that the state-owned company will be able to secure the loan financing by the end of the year. BEH needs the money to enable its heavily indebted subsidiary National Electricity Company (NEK) to repay debt owed to the Bulgarian units of U.S.-based AES Corp. and ContourGlobal. Deputy Energy Minister Nikolai Nikolov told an energy forum in Sofia last week that BEH had decided to launch direct talks with banks over borrowing EUR 650 M after a tender to raise the funds collapsed. Bulgaria cancelled the tender procedure because both candidates, who submitted binding bids to arrange a bond issue and provide bridge financing ahead of it, had asked the government to extend state guarantees on the debt – a request denied by Finance Minister Vladislav Goranov in view of NEK's financial deficits.
Source: Monitor (24.11.2015)

Bulgaria Develops Its Natural Gas Market While Bulgaria is preparing to liberalize its electricity market completely, it is also beginning to develop a natural gas trading segment, Deputy Energy Minister Zhecho Stankov told a discussion on Monday. Stankov said this will allow the local market to improve and become integrated into those of neighbouring countries. With the construction of a natural gas distribution hub in Bulgaria, the country will acquire a functioning gas market, he predicted. The government has proposed a concept for the future gas hub in order to fulfill one of its main goals: the goal of diversifying gas supply sources and routes, he recalled. When the project is carried out, the country will have at least three different sources of gas supply and will thus fulfill one of the most important principles of the European energy market. In addition to importing gas from Russia and via the Southern Gas Corridor, it will also rely on local extraction, the Deputy Energy Minister noted. He pointed out that last week the European Commission included the Bulgarian gas hub concept on a list of projects of shared interest, which means Sofia can expect funding from the EU. Energy and Water Regulatory Commission (EWRC) Chairman Ivan Ivanov said the liberalization of the gas market is of key importance for the whole society.
Source: Dnevnik (24.11.2015)

Nine Banks Show Interest in Lending up to EUR 650 M to Bulgaria’s BEH Nine banks have confirmed interest in lending up to EUR 650 BGN to the state-owned Bulgarian Energy Holding (BEH) company, Energy Minister Temenuzhka Petkova has said. The energy group is seeking the money to enable its indebted subsidiary National Electricity Company (NEK) to repay debt owed to the local units of U.S.-based AES Corp. and ContourGlobal. The two coal-fired power plants, AES Galabovo and ContourGlobal Maritsa East 3, owe BGN 325 M to lignite coal mines in Maritza East basin. The plants’ owners have agreed to cut the price at which they sell their electricity to NEK once they get repaid by the company. The Bulgarian authorities are currently preparing a timetable for negotiations with the interested lenders, Petkova said at an energy conference in Sofia on Monday. Confidentiality agreements have been signed with the nine banks and negotiations with each of them over loan terms are about to begin. The lenders were not expected to seek Bulgarian government guarantees for the debt, Petkova added. Bulgaria decided to launch direct talks with banks over lending to BEH after BEH’s attempt to raise funds for repaying NEK’s debt to the two coal-fired power plants through a bond issue failed last month. Both candidates, who had submitted binding bids in BEH’s tender for arranging a bond issue and extending bridge financing ahead of it, had sought government guarantees for the debt. Finance Minister Vladislav Goranov, however, had rejected the demand in view of NEK’s peristent financial deficits. Petkova said at the start of the energy conference on Monday that NEK has slashed by nearly a third its operating loss for the first nine months of 2015. NEK posted operating loss of BGN 218 M for the January-September period, a decrease compared with BGN 324 M loss a year earlier, said Petkova.
Source: Monitor (08.12.2015)