Departing E.ON Made Profit, Under-Investment in Bulgaria - Watchdog

Power distributor E.ON is leaving Bulgaria at a profit and an unfulfilled investment program, said Angel Semerdzhiev, Chair of the State Commission for Energy and Water Regulation (DKEVR), at an open session of the watchdog.

He explained that E.ON had registered the biggest delay in the implementation of its investment plans as compared to the two other power distributors operating in the country.

On December 03, E.ON's website informed that it had sold its 59% share of the power distribution business in Northeastern Bulgaria to Czech company Energo–Pro.

The European Bank for Reconstruction and Development (EBRD) followed suit by selling its 8% in the power supply and distribution business in the region.

Czech Energo–Pro will pay EUR 133 M for the 67% share, with the deal expected to be wrapped up by the beginning of 2012.

In the course of DKEVR's open session, Semerdzhiev did not specify E.ON Bulgaria's rate of underinvestment, but he firmly opposed claims that the German power utility had decided to sell up its business in the country because it had been generating losses.

The DKEVR Chair explained that, judging by E.ON Bulgaria's annual reports, it had not closed any year in the red.

"Last year they experienced a substantial decrease in profits, but this is only normal for a period of crisis," Semerdzhiev noted, adding that the move was part of the policy of the parent company, which was selling its assets in other countries too.

The most recent publicly available data about the power distributor's investments are from September 2010, when E.ON managed to fulfill as little as 30% of its investment program by investing  a total of BGN 31.2 M.

The reports of E.ON Bulgaria Grids and E.ON Bulgaria Sales show that they closed 2010 at a loss of BGN 387 000, compared to a profit of BGN 24.7 M for 2009.

"The new company may wish to introduce its know-how, to make fast-track investments so as to compensate for the delays in the investment process, and to improve the situation with the unaccounted-for energy or the losses," Semerdzhiev stated.

Despite all the criticism, DKEVR praised the withdrawing German utility for the improved dialogue it had achieved over the past year and for the fulfillment of the watchdog's the criteria for the quality of power supplies.

DKEVR's Chair reminded that the regulatory body had not been informed about the deal in advance, but specified that it did not constitute an infringement because no such requirement existed.

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