site.bta National Electric Company to Save Lv 1 Bln After Change in Long-Term Electricity Sale Agreements with US Thermal Plants

National Electric Company to Save Lv 1 Bln After Change in Long-Term Electricity Sale Agreements with US Thermal Plants

Sofia, April 8 (BTA) - Agreements amending the long-term
electricity sale agreements with AES Maritza East 1 TPP and ContourGlobal Maritsa East 3 TPP
were signed at the Council of Ministers on Wednesday in the presence of Prime
Minister Boyko Borissov and Energy Minister Temenouzhka Petkova.

The documents were signed by National Electric Company (NEK)
Executive Director Peter Iliev, AES Bulgaria Commercial General Manager
Ivan Tzankov and ContourGlobal Maritsa East 3 TPP CEO Garry
Levesley. Also attending the signing were AES Corporation
President for Europe and Middle East Julian J. Nebreda and US
Ambassador to Bulgaria Marcie Ries.

Under the amended agreements, the price which NEK pays the TPPs
for capacity disposition drops by 31 per cent in total for both
plants: by 14 per cent for AES Maritza East 1 and by 17 per cent
for ContourGlobal Maritsa East 3. The agreements' validity term
remains unchanged: they will be in effect for ten more years.
The total financial effect for NEK will be 1 billion leva -
around 100 million leva a year per TPP, Minister Petkova said.

The electricity price which NEK pays the TPPs has two
components: one for capacity disposition and a smaller one for
the energy itself. Petkova said that if NEK used to pay 328
million leva a year to AES Maritza East 1 and 3 283 million leva
to ContourGlobal Maritsa East, under the amended agreements it
will pay 282 million leva and 235 million leva a year,
respectively. "I think that this is a very good price which can
save the energy sector from a financial collapse," Petkova
said. NEK will pay its debts to its US partners amounting to 700
million leva by the end of June through a loan, she explained.

Speaking after the signing, Prime Minister Borissov said that
the amended agreements are satisfactory and give the opportunity
for similar negotiations with the electricity distribution
companies and green energy producers in Bulgaria. In his words,
the negotiations were conducted well-groundedly, with exact
calculations on the part of Minister Petkova. The previous years
the State was not correct when it did not pay the TPPs the
money due, he went on to say. "Bulgaria is a country governed by
law and if we had started chasing the investors and
terminating the agreements, this would have been a big problem
for our reputation," Borissov said.

Taking a question, the Prime Minister said that the ambitious
goal the Cabinet has set itself is to have NEK break even in
June. Borissov said that every transaction and every scheme will
be reviewed, all contracts with the buyers and sellers along
the line will be renegotiated, things will be streamlined so
that NEK posts a profit "be it even 0.01 lev". The Prime
Minister noted that there are reserves, and implied the presence
of serious shortcomings in respect of green energy.

Nebreda said the AES company finds the agreement as very good
for Bulgaria. Electricity will be one of the competitive
advantages of the country, he said.

Levesley said that Wednesday's agreement is a very good
compromise for Bulgaria - no one could have guessed back in 2008
that the economic crisis would occur. In his words, the deal
makes for correct partnership which will go forward. Bulgaria
has a bright future and the US company plans to stay here for a
long time, Levesley said.

Ambassador Ries said that the two companies make up the biggest
US investment in Bulgaria and that Wednesday's positive outcome
will convey a positive image of the business environment in
Bulgaria.