Bulgaria’s NEK amassing new losses, deputy PM says

Written by on August 26, 2014 in Bulgaria - Comments Off on Bulgaria’s NEK amassing new losses, deputy PM says

Bulgaria’s state-owned electric utility NEK was losing about 50 million leva a month as a result of regulatory decisions, while at the same time giving preferential treatment to companies with political connections when it came to making payments, deputy Prime Minister Ekaterina Zaharieva said on August 26.

On average, NEK paid about 53 per cent of what it owed under contractual obligations during the first seven months of the year, Zaharieva told Bulgarian National Television (BNT). The figure had been established by an internal audit ordered by the caretaker government after taking office earlier this month, she said.

Some companies, which had ties to “certain political parties”, received more than 90 per cent of what they were contractually owed, while others received well below the average, Zaharieva said. She declined to give further details, saying that the full results of the audit, including the names of the firms and the amounts paid to them, would be made public by the economy ministry “within days”.

Zaharieva said she asked that a similar audit is carried out for 2012 and 2013, to see how the payments dynamic changed. Centre-right party GERB was in government in 2012 and was followed by a caretaker cabinet in March-May 2013 (in which Zaharieva was deputy prime minister in charge of economic affairs as well), which in turn gave way to the socialist-mandated government of Plamen Oresharski, which governed until replaced earlier this month.

Zaharieva said that the caretaker government’s immediate tasks were to draft a mechanism under which NEK would pay its dues uniformly to all its contractual parties, but also to reduce the monthly losses sustained by the state utility.

One of the tools that the caretaker government plans to use to achieve the latter goal is the creation of an “energy board”, an advisory body whose membership would include representatives of government institutions, energy sector companies, consumers and regulators.

Zaharieva is expected to chair the body, which will be tasked with carrying out a comprehensive analysis of Bulgaria’s energy sector and make recommendations to “re-balance” the industry, including a brief to suggest legislative amendments, if needed.

The haphazard policies pursued by various Bulgarian governments in the energy sector have hit NEK the worst, with the utility amassing 2.9 billion leva (about 1.48 billion euro) in debt, the utilities regulator said in June. Of that amount, 1.5 billion leva was from electricity-trading losses and other 1.4 billion leva were losses from investment in the shelved Belene nuclear power plant and the Tsankov Kamuk hydro-power array.

(Photo: greenhitma/sxc.hu)

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