CEZ to begin talks with second prospective buyer of Bulgarian assets

Written by on December 3, 2018 in Bulgaria - Comments Off on CEZ to begin talks with second prospective buyer of Bulgarian assets

Czech state-owned utility CEZ will begin talks with the second-placed bidder in the tender to sell its Bulgarian assets, Bulgarian National Radio (BNR) reported on December 3.

In addition to the talks with India Power, CEZ will continue negotiations with the initially-chosen buyer, Bulgarian firm Inercom, BNR quoted the company as saying.

CEZ, controlled by the Czech government, operates in the country through seven companies and its power distribution arm services western Bulgaria, including the capital city of Sofia. The company, reportedly, has been looking to exit the Bulgarian market for more than a year and has accused Bulgarian authorities of creating an unfavourable regulatory environment, lodging an international arbitration lawsuit in 2016.

But its chosen buyer Inercom, announced in February, raised loud objections among Bulgaria’s politicians, given its small scale and questions about how it plans to cover the acquisition price. Inercom owner Ginka Vurbakova said at the time it would be financed using loans and the company’s own money, but some opposition MPs have claimed that the company was a stand-in for other, unknown interested parties.

Inercom had until November 30 to make the payment for the CEZ assets, but has been prevented from closing the deal by Bulgaria’s Commission for Protection of Competition (CPC), which ruled against the proposed deal on the grounds that it would lead to “establishing or strengthening the dominant position of the merged group,” due to the fact that Inercom owns several solar parks, which would benefit from the acquisition of CEZ assets, in particular the electricity trading subsidiary.

Since then, Inercom sold its solar parks and applied again for CPC approval, but was denied, with the regulator saying that its original ruling was still being appealed.

BNR reported on December 3 that Bulgaria’s Supreme Administrative Court has granted the appeal and ordered CPC to review its initial decision, but the regulator was appealing that ruling in front of a five-judge panel of the court.

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