Czech state-owned utility CEZ said on February 22 that its supervisory board has approved the sale of the group’s assets in Bulgaria, which include the electricity distribution company that services the western part of the country and the capital city of Sofia.
The buyer is Bulgarian firm Inercom Bulgaria, with a contract expected to be signed “in a few days”, CEZ said. The statement did not mention the transaction price, but said that “taking into account the sales price, the group’s fourteen-year-investments in its Bulgarian operations yielded an overall positive return.”
One report in Bulgarian media said that Inercom offered 320 million euro for CEZ’s assets. In 2004, the Czech group paid 281.5 million euro for three regional power distribution companies in western Bulgaria, which it later merged.
CEZ said it would sell all its assets in Bulgaria, structured in seven companies – CEZ Bulgaria, which manages the group’s operations in the country; grid operator CEZ Razpredelenie; electricity distribution unit CEZ Elektro Bulgaria; electricity trader CEZ Trade Bulgaria; communications and technology subsidiary CEZ ICT Bulgaria; renewable energy producers Free Energy Project Oreshetz (solar) and Bara Group (biomass).
Last year, CEZ sold its thermal power plant in the city of Varna to Bulgarian firm Sigda, which media reports linked to former transport minister Danail Papazov, for an undisclosed amount.
Inercom Bulgaria was only registered last year, but its owner had three solar parks in the country, Bulgarian media reports said.
The company offered the highest price among several bids for the Bulgarian assets, which CEZ said it received in early 2017, and was “significantly above the fair market value of the assets sold, as determined in an independent appraisal.” The deal is subject to regulatory approval.
CEZ said that the transaction would not affect the international arbitration that the group initiated against Bulgaria in 2016, which CEZ continues to proceed with. The group filed its claim with the World Bank’s arbitration institution Icsid, saying that the actions of Bulgarian authorities were damaging the operations of CEZ subsidiaries and “causing the long-term critical situation on the local energy market that is not improving”.
If the deal goes through, CEZ would be the second of three strategic investors that acquired Bulgaria’s electricity distribution assets in 2004 to exit the country. Germany’s E.ON, which bought two regional distribution companies in northern and north-eastern Bulgaria, was the first to sell its assets in the country, to private Czech energy group Energo-Pro for an undisclosed amount in 2012.
Austria’s EVN, which services southern and south-eastern Bulgaria, bought the other two regional distribution companies in 2004.