site.btaAES Maritsa East 1 Sure There Is No State Aid in Contract with American Power Plants

AES Maritsa East 1 Sure There Is No State Aid in Contract with American Power Plants

Sofia, April 21 (BTA) - The European Commission has not
contacted us to require information whether the contract with
the National Electric Company (NEK) for long-term purchase of
electricity constitutes state aid, but we are sure that the
final decision of the EC will be that there is no state aid in
this contract, AES Maritza East 1 CEO Olivier Marquette told a
news conference Tuesday.

Proceedings have been launched at the Directorate General
Competition of the European Commission concerning the assumed
state aid under the form of long-term contracts for purchase of
electricity, the Ministry of Energy said on April 15.

The 2001 contract for the purchase of electricity, has been
signed at competitive conditions, the structure of the contract
is typical and standard, but return corresponds to market
standards and loan obligations the company has received to
develop the plant, Marquette said. He was confident the
contracts will continue to be valid after the liberalization of
the Bulgarian energy market.

Marquette noted that when the energy market is entirely
liberalized and if the market price is lower than the one set
down in the purchase contract then a compensation mechanism
should be found. This is a standard process which has also been
applied in other countries where similar contracts were
concluded and where the market was liberalised.

Ivan Tsankov, Chief Commercial Director of the power plant,
pointed out that the agreement signed with NEK on April 8
provides for a reduction of the availability price of Maritza
East 1 TPP to be reduced by 14 per cent, which will save NEK
about 50 million leva a year, or a total of 550 million leva for
 the remaining duration of the contract which expires in 2026.
The agreement should become effective by June 30, providing that
 NEK pays all due obligations to the power plant, currently
amounting to some 400 million leva. These include 50 million
leva obligations of the plant to Maritza East Mines that will be
 paid respectively, Tsankov said.

Thirty per cent of the investment for the development of AES
Maritza East 1 TPP was made by AES, the rest was provided from
long-term bank loans which are being serviced according to the
obligatory state commitment for mandatory purchase of
electricity. To change this contract, in addition to NEK having
to pay, the lenders should also approve the change, the TPP
management said. Marquette noted that AES creditors are
well-informed about the negotiations and the agreement achieved
with NEK, and that these steps will improve the condition of the
 Bulgarian energy system as a whole.

The sum AES Maritza East 1 TPP has to pay to the bank loaners
totals 543 million euro and 132 million euro is the sum St.
Nicholas Windfarm at Kavarna, which the power plant owns, has to
 repay. The windfarm is the largest in the country and NEK also
owes it payments to the amount of 16 million euro. These,
however, are not subject to the concluded agreement, Tsanov
said.

TPP Deputy Director Todor Belezhkov, said 50 per cent of the 686
 MW installed capacity are currently in use.