site.bta"State, Amended Law Not to Blame for Job Losses at Vidachim" - Energy Minister

"State, Amended Law Not to Blame for Job Losses at Vidachim" -  Energy Minister

Sofia, March 15 (BTA) - The State and the amendments to the
Energy Act are not to blame for some 300 job losses at Vidachim,
 Bulgarian Energy Minister Temenouzhka Petkova commented at an
extraordinary news briefing at her Ministry on Sunday.

At the end of last year, Vidachim, which is the largest
enterprise in Vidin (Northwestern Bulgaria), incurred a tangible
 risk of stopping work because of an undersupply of coal for its
 TPP as the plant owned nearly 19 million leva to the National
Electric Company (NEK). More than 300 Vidachim workers will
become redundant on Monday, and the enterprise will close down
for lack of work.

"The news about the downsizing of some 300 people in Vidin,
which is Bulgaria poorest region, is alarming, but it is
perplexing why this is blamed on the recently adopted amendments
 to the Energy Act," Petkova said.

Under the amendments, NEK no longer purchases electricity
generated by industrial plants and heating utilities unless it
is from high-efficiency cogeneration and within quotas set by
the regulator. All other quantities will have to be sold on the
free market. Previously, NEK was under an obligation to purchase
 all electricity produced by plants contracted for compulsory
purchase, even though this production exceeded the
regulator-fixed quotas, as a result of which the company built
up a huge deficit.

"The amendments to the law are intended to melt away the deficit
 at NEK, which amounted to 644 million leva for 2014 and topped
3,000 million leva in the entire system," the Energy Minister
said. In her words, one of the measures taken to reduce the
deficit is the removal from the electricity mix of the
industrial plants and heating utilities which generate power by
a low-efficiency method, as is the case of Vidachim.

"Between 2011 and 2013, NEK paid Vidachim 141 million leva in
feed-in tariffs for electricity, while the earnings of the
Vidin-based enterprise for the same period were a little over
170 million leva. This shows that Vidachim has practically
turned into an electricity producer," Petkova said. She
explained that NEK purchased electricity from Vidachim at 140
leva/MWh and sold it at 125 leva/MWh, thus incurring losses of
15 leva/MWh. For 2013 alone, Vidachim received 54 million leva
from NEK, while the wage bill for that period was 4.5 million
leva, she pointed out.

"We can no longer afford Bulgaria's energy sector and NEK to be
loss-making and deficit-running because the system's security is
 reaching a critical point," Petkova said. This necessitated the
 amendments to legislation, which are intended to save the
energy sector from the collapse. She argued that industrial
plants can sell their electricity on the free market where,
however, the prices are lower. "An analysis we made showed that
NEK posted a loss of 231 million leva for 2014 from purchasing
power from the industrial plants," the Energy Minister added.