site.btaEconomy Ministry Reports Increased Energy Sales, Revenue

Sofia, August 5 (BTA) - The long-term credit rating of the Bulgarian Energy Holding (BEH) is 'ВВ+' with a stable outlook, while the reduction of spinning reserve capacity from 1,040 MWh to 500 MWh has saved public costs to the amount of over 60 million leva, a report of the Economy and Energy Ministry posted on its website said Tuesday. The report envisages the last year in governance.
 
The planned losses of the National Electricity Company (NEK) of up to 344 million leva have been reduced to 132 million leva in 2013. As a result of the raised NEK sale prices in its capacity as public supplier to the level of 100.43 leva MWh as of January 1, 2014, by the end of the regulatory period the company is expected to have higher revenue from sales on regulated market amounting to some
74 million leva.

After the revisions to the Energy Act became effective and the fee for exporting electric power was reduced, NEK has increased its 2013 free market revenue by 48 million leva. Revenue from sales of electric power in the first quarter has increased by over 29 million leva for Kozloduy N-plant. Maritza East Mines, in turn, have reported an increase of coal sales of nearly 10.0 million leva and additional revenue of about 7.5 million leva for the remaining months of 2014 is expected after price of coal was raised.

The restriction on purchases of co-generated electricity at feed-in tariffs will cut NEK's losses by nearly 40 million leva a year. NEK's participation in the balancing electricity  market as of this last June is expected to offset part of the expenditure on pumped-storage power stations by about 30 to 35 million leva and bring about 100 million leva in revenues a year from balancing electricity generated by water power stations, the Economy and Energy Ministry said. 

The unbundling of the Electricity System Operator (ESO) and NEK in line with the EU's Third Liberalization Package was done by experts of BEH, ESO and NEK, without hiring external consultants, leading to savings of 2 million euro. Also, failure to comply with the EU Directive would have cost Bulgaria fines of 8,500 euro a day.

Fitch Ratings assessed BEH's liquidity as sufficient. The indebtedness of the holding company and its subsidiaries is around the acceptable levels and problems are not expected, according to the Ministry. Despite the efforts made to stabilize NEK, the long-term contracts for electricity purchases from thermal power plants and contracts for purchases at feed-in tariffs led to a negative financial result for the company.

Regarding the key energy projects, the gas interconnectors, the Ministry reported that construction and assembly were done on the land section of the Bulgarian-Romanian interconnector, a contractor was selected for the Bulgarian section of the project with Serbia, and an environmental impact assessment was approved for the gas interconnector with Greece. A Memorandum of Understanding was signed and a feasibility study for a gas interconnector with Turkey is under preparation.

Bulgaria reacted promptly to an infringement procedure launched by the European Commission over the South Stream Bulgaria joint venture (between the Bulgarian government and Russia's Gazprom) and ensured active working dialogue with EC representatives on the sorting out of all the outstanding issues in implementing the gas pipeline project in Bulgarian territory, the Ministry said.

As to Unit 7 of the Kozloduy Nuclear Power Plant (NPP), the Council of Ministers decided to start negotiations with Westinghouse Electric Company on the structuring and financing of the project using the Westinghouse AP1000 nuclear power plant. The agreements reached during the negotiations were confirmed. The entry into force of the shareholder agreement between Kozloduy NPP, Kozloduy NPP-New Builds and Westinghouse Electric Company is conditional on approval by the next government, said the Ministry.