Bulgarian President Radev wades into CEZ assets sale debate
Bulgarian President Roumen Radev became the latest senior politician to express concerns about Czech utility CEZ’s intention to sell its entire Bulgarian business to a little-known Bulgarian firm, going as far as to say that he was considering calling a meeting of the Consultative Council on National Security on the topic.
One day after his initial reaction, which was to call, in a brief statement posted on the presidency’s website, on all Bulgarian institutions to guarantee the state’s and public’s interests in the proposed deal, Radev used a news conference on February 27 to heap more pressure on the cabinet.
He said that the resignation of Energy Minister Temenouzhka Petkova raised more questions than answers, describing the deal as a covert acquisition in which the chosen Bulgarian company, Inercom, was a front for other interests. “The question here is who and why do they hide their intentions?” he said.
“How can a company without history, experience, capacity or resources get a huge bank guarantee and why are the names of the banks, the most transparent financial institutions, being kept hidden?” Radev said.
Reports in the Czech Republic, picked up by Bulgarian media, said that two banks that agreed to extend loans for Inercom’s acquisition of CEZ assets were Bulgaria’s UniCredit Bulbank and First Investment Bank. Contacted by public broadcaster Bulgarian National Radio, UniCredit Bulbank said that it did not comment on specific business transactions, while First Investment Bank said it did not undertake any commitments regarding the proposed deal.
State-owned Bulgarian Development Bank, mentioned in earlier reports as a potential guarantor for CEZ Bulgaria’s loan from the European Bank for Reconstruction and Development, has also denied being part of the deal.
Radev poured scorn on the statements that Inercom’s acquisition was a transaction between two private entities. “By law, CEZ is part of the national and European critical infrastructure with direct bearing on national security issues. This is why any suggestion that this is a banal commercial transaction is deceitful,” he said.
Asked about the Consultative Council on National Security, Radev said that he would make a decision after he concluded his meetings with the heads of various regulatory bodies and had more information on the issue.
In the meantime, it was the government’s job to answer any questions regarding the proposed deal. Asked if the presidency could interfere in the deal, Radev said that all the state institutions and regulatory bodies with a say on the matter report to the cabinet. “I expect an answer from there, as well as appropriate actions that will defend the public interest and national security,” he said.
Meanwhile, reports in Bulgarian media said that the three regulators that would have to rule on the proposed deal would have no grounds to block it.
The head of the Commission for Energy and Water Regulation, Ivan Ivanov, told Bulgarian National Television that the utilities regulator could only have two possible reasons to deny the deal – if only a part of the electricity distribution unit was being sold or if the distributor’s assets were being mortgaged – neither of which was the case.
The competition watchdog would be unable to block the deal on anti-trust grounds just because of the ownership change (CEZ remains by far the largest electricity provider in western Bulgaria, as the slow liberalisation of the market has had a limited impact so far), nor would the Financial Supervision Commission (whose approval is needed because stock in two CEZ subsidiaries are listed on the Bulgarian Stock Exchange.)
Two other state institutions were tasked with investigating Inercom, the proposed buyer of CEZ’s seven subsidiaries in Bulgaria – the State Agency for National Security and the National Revenue Agency. Inercom’s owner, Ginka Varbakova, said that the company had no outstanding debts to the revenue agency.
Prime Minister Boiko Borissov, who ordered the probes, said on February 27 that he spoke with his Czech counterpart, Andrej Babis, asking for the Czech government to forward all available information on the proposed deal. The Czech state owns the majority stake in CEZ, the country’s electricity utility.
Borissov said in a statement that during their phone conversation, Babis said he was given assurances by the CEZ supervisory board that the deal was fully legal and presented no risks for the parties involved. CEZ had carried out its due diligence of Inercom and its financing proposal.
As regards the future of Energy Minister Temenouzhka Petkova, who submitted her resignation at Borissov’s urging a day after the deal was announced, due to the fact that she has known Varbakova for 20 years, the government coalition’s meeting on February 27 decided to postpone the decision until March 1, when the National Assembly’s energy policy and security services oversight parliamentary committees will hold a joint sitting to hear the findings of the investigations into Inercom.