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26.09.2014 17:44
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If the next government continues the power sector stabilisation measures proposed by the interim government, the financial gap at the state incumbent – the National Electricity Company (NEK) - would most likely take 3 to 5 years to be diminished. In this period however, NEK will continue to generate debt and the efficiency of the measures, one of which is the planned 10-percent price hike for households and small businesses on the regulated market, depends on continuity and political will, interim economy and energy minister Vasil Shtonov stated during a press briefing today.
According to the ministry’s information until June 30, 2014, NEK has an accumulated financial deficit amounting to BGN 2.9 billion, BGN 1.5 bn of which come from old mega generation projects such as the hydropower complex “Tsankov Kamak” and the suspended Belene nuclear station for which NEK is facing arbitration charges from its Russian partner Atomstroyexport.
The company’s financial gap further widened with BGN 360 million for the first six months of 2014 alone, which are to grow with another BGN 900 m until July, 1 2015, minister Shtonov warned.
All the generations that get priority purchase and feed-in tariffs – such as renewables, the two modernized coal-fired power stations of U.S. companies AES and ContourGlobal and cogenerations – will be accountable for the new deficit at NEK.
Political continuity needed
“I do not wish to speak about past years before the elections, but a lot of measures have been undertaken on paper without actual results. This is why NEK’s deficit will continue to grow, if this does not change”, minister Shtonov said.
He insisted that the planned measures and the work of the energy council should be continued by the next government.
What are the measures?
The planned gradual regulated electricity price hike is just a small portion of the measures covering just BGN 200 million of the anticipated financial gap, minister Shtonov said. The remaining BGN 700 million would be covered by limiting the factory cogens which prefer to sell their electricity at higher regulated prices and buy cheaper power from the free market for their own needs.
He said the next governmet would also have to take steps towards re-negotiating the contracts with AES and ContourGlobal as well as take some measures in the same vein for renewables. The interim government however cannot vote the needed legal changes to start this process, minister Shtonov said, insisting that existing contracts could not be violated because otherwise such actions would scare investors away from Bulgaria.
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