Decision on CEZ Bulgarian licence postponed to April

Written by on February 20, 2013 in Bulgaria, Business, News - No comments

Bulgaria’s State Energy and Water Regulatory Commission (SEWRC) said on February 20 that it has opened proceedings that could result in the revocation of the electricity distribution licence held by Czech energy firm CEZ in Bulgaria. However, a final decision in that sense would be taken after April 16, the next time the regulator will meet to review whether CEZ has implemented the regulator’s recommendations.

SEWRC opened the proceedings after a late-night meeting on February 19. Earlier that day, Prime Minister Boiko Borissov said that the regulator would revoke the licence by the end of the day – even though, by law, SEWRC is the only body that decide whether to do so or not.

The regulator has found 21 separate instances of breaches of regulations by CEZ’s two Bulgarian units. The worst violations had to do with CEZ not calling public tenders (instead awarding contracts to its own subsidiaries), failure to turn in important paperwork related to meter replacements, as well as failure to answer regulatory queries on time, SEWRC member Andon Rokov told reporters at a news conference.

Bulgaria’s other two energy distribution companies, Austria’s EVN and Czech Energo-Pro, had been fined for violations as well, but did not face the threat of having their licences revoked, although the investigations against them were still under way, the regulator said.

Should CEZ lose its licence, existing regulations require authorities to appoint a special administrator that will provide the service in the meantime, but CEZ would retain ownership of its Bulgarian assets and the administrator would have no right to take on new debt or sell property.

At the same time, SEWRC said that it was advised by its legal department any electricity cut would have to carried out in line with existing regulations – which stipulate that price changes are carried out once a year, on July 1. However, the regulations can be amended to allow for more frequent changes.

On February 19, Borissov said that the Cabinet would submit a proposal to the regulator with calculations that showed that the electricity price could be cut by eight per cent on March 1.

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