Bulgaria PM Power Swipe Reminiscent of Hugo Chavez*

Views on BG | April 9, 2010, Friday // 12:08|  views

Photo by BGNES

Vesselin Zhelev and Mariyana Boykova

waz.euobserver.com

In a swipe at foreign investors reminiscent of Venezuelan leader Hugo Chavez, Bulgaria's populist Prime Minister Boiko Borisov is threatening to nationalise the country's power distribution utilities, reversing a EUR 700 M deal sealed six years ago with Germany's E.ON, Austria's EVN and Czech firm CEZ.

Mr Borisov, a 51-year-old former bodyguard and a karate black belt, who describes himself as a "centre-right" leader, accused the companies of ripping off customers and siphoning funds from ther state-owned power supplier, the National Electric Company (NEK).

The companies have made no official reaction to his threat. But a CEZ official told the 24 Chasa daily that Bulgaria has fostered "tensions and animosities against foreign investors."

It is not the first time that Mr Borisov has hit the front pages with flamboyant statements, not all of which come to pass. He has backtracked on pledges to cut value added tax, to raise the retirement age and health insurance contributions and to hold a referendum on whether to keep Turkish language news broadcasts on state TV. A bid by his party to impeach President Georgi Parvanov, a vocal critic of the government, crashed in parliament.

NEK buys one megawatt of electricity from power plants for leva 90 (EUR 46) and sells it to the distributors for leva 88, which in their turn sell it to retail customers for leva 146, Mr Borisov said, citing data from a recent audit of the state company, which has run up a leva 1.2 billion debt. (EUR 1=BGN1.95)

"This will be ended, regardless of the price," he told reporters in Sofia on Wednesday (7 April). Asked whether he could annul the set-up, he said: "Yes, I am considering all options. This scheme will be ended."

He also accused the distributors of failing to pay dividends to the state, which has retained minority stakes in almost all Bulgarian companies.

E.ON, EVN and CEZ each acquired 67- ercent stakes in Bulgaria's northeast, southeast and western regional power distribution utilities in 2004 in a deal that was supposed to break up the previous state monopoly in the sector. In practice, they have merely carved up the national distribution market offering no alternative provider to customers in their respective regions.

Complaints about poor service, recurrent billing errors and ever rising prices culminated last month when hundreds of people rallied in front of the CEZ office building in Sofia and pelted it with eggs.

The protest was led by VMRO, a nationalist group, and followed a proposal by EVN to introduce an additional charge on electric meters as a vehicle to raise money to upgrade the grid.

CEZ has also angered millions of customers by switching to quarterly billing from the traditional monthly one. It has drawn criticism from the former EU commissioner on consumer protection, Meglena Kuneva, a Bulgarian, for what she sees as non-transparent billing practices.

CEZ' regional manager in Bulgaria, Jan Vavera, said on Wednesday that Bulgaria's electricity regulator had approved all the business plans of his company, including its missed dividend payments. He acknowledged that CEZ had made billing mistakes but voiced frustration over what he said was inefficient management of the electricity sector in Bulgaria.

"I notice a very unpleasant situation, which was created here, in Bulgaria," he added in an interview for 24 Chasa. "Tensions and animosities against foreign investors are being fomented here on a long-term basis."

Mr Vavera said there had been 37 lawsuits between his company and the Bulgarian electricity regulator in the past three years. CEZ resisted for one year a regulator order to switch back to monthly billing and eventually backed down. It drew public wrath for providing just one telephone line for complaints and emergencies for 2 million customers.

All three distributors have complained they were confronted with an outdated power grid in need of heavy investment in order to match European standards. Regulations have however guaranteed them a 16 percent profit in the first three years after the privatisation and a 12 percent profit later on.

*The title of the article has been changed by the Editorial Staff of Novinite.com

We need your support so Novinite.com can keep delivering news and information about Bulgaria! Thank you!


Tags: electricity distribution companies, CEZ, EVN, EON, power distributor

Back  

» Related Articles:

Search

Search