Bulgaria caretaker cabinet asks utilities regulator chief to resign

Bulgaria’s caretaker Economy Minister Vassil Shtonov said on August 27 that the cabinet asked the head of the State Energy and Water Regulatory Commission (SEWRC) and two other members of the regulator to resign from their positions.

Talking to reporters after the weekly meeting of the cabinet, Shtonov said that the regulator failed in its duty to create a balanced system in the energy sector, while SEWRC chief Boyan Boev had overstepped his mandate by making statements of political nature.

Boev and the other commission members whose resignations were sought, Lilyana Mladenova and Elenko Bozhkov, declined to comment, as reported by local broadcaster Darik Radio.

Boev was appointed by the now-departed Plamen Oresharski administration in December 2013, having previously served several months as chief executive of the Bulgarian Energy Holding.

Under Boev, the regulator continued the policy of reducing electricity prices – one of the electoral promises made by the Bulgarian Socialist Party, which held the government mandate of the Oresharski cabinet – and also pursued license revocation proceedings against the privately-owned electricity distribution companies, which was seen by local observers as an attempt to boost the socialists’ approval ratings ahead of the May 2014 European Parliament elections. (The socialists were soundly defeated, triggering the break-up of the ruling axis and the resignation of the Oresharski administration.)

The proceedings against the electricity distribution firms raised questions about the regulator’s independence, a point raised by European energy commissioner Guenther Oettinger in a letter to Bulgarian authorities, leaked to the Bulgarian media and published on May 8.

The letter, dating to April 4, said that the regulator’s administrative capacity has not been strengthened (as recommended by the European Commission in 2013), whereas Boev’s appointment “does not contribute to building trust in the independence and impartiality of the regulator.”

SEWRC’s actions to reduce electricity prices are widely seen in Bulgaria as one of the main reasons for the widening debt of Bulgaria’s state electric utility NEK, which reached 2.9 billion leva (about 1.45 billion euro). Speaking to private broadcaster bTV earlier on August 27, Shtonov said that this figure could rise as high as four billion leva by mid-2015 if no measures were taken to reduce the company’s losses.

He said that one such measure would be increasing electricity prices by 50 per cent over a period of five to 10 years, during which NEK would have to be restructured to become more efficient. A large spike in electricity prices would help NEK recover recent losses quicker, but would offer little incentive for the utility to improve efficiency, he said.

Also on August 27, the Economy Ministry made public the list of payments made by NEK under contractual obligations, which showed that the state owned Maritsa Iztok 2 power plant (Boev’s previous place of employment) and two companies linked to controversial Bulgarian businessman Hristo Kovachki received a much higher percentage of money owed by NEK than other companies.

The ministry’s data showed that NEK owed 1.13 billion leva to electricity suppliers, with the biggest creditors being the AES Maritsa Iztok 1 and ContourGlobal Maritsa Iztok 3 power plants (both owned by private US investors), which were owed 288.1 million leva and 216.4 million leva, respectively. The state-owned Kozloduy nuclear power plant was owed 180.4 million leva.



The Sofia Globe staff

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