Bulgaria’s Finance Minister Vladislav Goranov said on April 3 that the Cabinet was not interested in acquiring a controlling stake in the local operations of power utility CEZ as part of the Czech company’s deal to divest its Bulgarian assets.
Goranov said, in his apperance before Parliament’s ad hoc committee tasked with investigating the circumstances of the proposed sale, that this was the official Government position and had been agreed with Prime Minister Boiko Borissov.
Borissov, who was summoned to appear in front of the committee, declined and explained, in a letter, that any statement he made on the topic of CEZ’s assets sale could have detrimental consequences for Bulgaria down the line, as his words could be used in the ongoing arbitration litigation with CEZ.
“I am categorically stating that the Bulgarian state does not have any intention to participate in any way in the acquisition,” Goranov said, as quoted by Bulgarian National Radio.
Czech state-owned CEZ announced its intention to exit the Bulgarian market in February. Its chosen buyer was Bulgarian company Inercom, set up last year and virtually unknown to the general public, which triggered a political storm amid fears that the prospective new owner lacked the necessary know-how to ensure that there would be no disruption in the quality of service. CEZ’s power distribution unit services western Bulgaria, including the capital city of Sofia.
Questions were also raised about the source of Inercom’s financing for the deal – the company’s owner said it would be funded partially using its own equity and using bank loans – with some media reports suggesting that Inercom may be a stand-in for other, unknown interested parties.
Last month, Inercom’s owner Ginka Varbakova met with Borissov and agreed to allow the Bulgarian state to participate in the proposed transaction by acquiring a controlling stake, although the exact details of how that might happen were not made clear at that time. At that time, Goranov said that there were several possible avenues for the Government participation.
Since then, there have been little development on the issue, with some media reports in Bulgaria suggesting that the Bulgarian state’s participation could complicate matters as regards CEZ’s ongoing international arbitration case against Bulgaria, filed in 2016. At the time it announced the agreement to sell the assets, CEZ’s board said that the transaction would not affect the arbitration case, but that was before Bulgaria showed an interest in joining the deal.
Nevertheless, Parliament set up the ad hoc committee last month to investigate the deal, but also to look into the privatisation of the electricity distribution companies in 2004, which saw CEZ acquire the bulk of its Bulgarian assets. The committee’s term is one month, at the end of which it would present its findings in a report to the rest of the National Assembly.