Experts, Investors See Bulgaria's Energy Sector as Success-Hurdles Mix

Bulgaria's energy sector is a mix of a number of success stories and shortcomings and hurdles, it emerged Friday during a panel discussion held in the frame of the first Bulgaria: Business UP investment conference.

Energy effectiveness is a global issue and a priority even in the most developed industrial countries in the world all while Bulgaria is lagging at the bottom of the EU by its energy effectiveness.

This major challenge for the energy sector in the country was pointed out during the panel titled "Success Stories and Untapped Opportunities in the Energy Sector" by Eng. Lyuben Mashkin, Chairman, Bulgarian National Committee for Industrial Energy, who has 50 years of experience in the industrial energy sector.

Mashkin stressed that Bulgaria has focused in the last years on developing legislation and normative acts for energy effectiveness, but instead of directing the policies to the end consumers and helping them, this legislation has ended up being only a hotchpotch of programs, plans and reports, mainly copied from EU documents on the subject. According to him, these EU normative acts often do not take into account local specifics.

The panelist further explained that Bulgaria has an Energy Effectiveness Act, but lacks strategy.

"Energy effectiveness is an impairment of Bulgaria's economy and we must find the reasons for it, so that we can cure it," he told the other participants.

Mashkin listed the main priorities in improving energy effectiveness as offering information on it, publicizing it, and educating employees and managers in the energy sector. He further criticized the government of Bulgaria for not working together with NGOs for achieving this goal.

"We are copying everything, but fail to use this so wide-spread European practice," he concluded.

Vladimir Dichev, CEO of CEZ Trade Bulgaria, listed the increase in regulation prices of electric power, the imbalance in these prices, and the large taxes on the import of electric energy as the three main challenges faced by the power utilities in the country.

He stressed that in the last 5 years taxes for the transfer of electric power in the country have increased nearly 3 times, which is not leaving enough financial resources for conventional energy.

Regarding the imbalance of electric power prices between what households and the business pay, Dichev explained that redirecting the financial burden to the business does not help at all since the consumers still ends up paying for it.

Czech-owned Power Utility CEZ operates in western and southwestern Bulgaria, employing about 4 000 Bulgarians. It has the largest network in the country with 40%-42% share of the annual consumption of energy in the country. It also owns the Varna Thermal Power Plant, TPP, where it produces electric energy from coal, he explained.

"We have very productive and very happy employees."

This is how Garry Levesley, Executive Vice President and Chief Executive Officer for Eastern Europe of US company ContourGlobal, opened his presentation.

He offered a summary of the "success history" of the company in Bulgaria. The VP and CEO focused on the Maritza Iztok Thermal Power Plant, the 4th largest in Bulgaria and the second most modern, as one of these successes since it preserves the environment to the maximum.

"The TPP is the first one on the Balkan peninsula that is compliant with all European standards. There is a special system to deal with the problem with ashes, which are no longer released in the atmosphere, and we recycle waste waters before they go to the rivers," Levesley explained.

Kostadin Sirleshtov, Office Partner, CMS Cameron McKenna, pointed out that Bulgaria can boast success stories in the energy sector in the frame of current legislation in the country.

He listed three such stories – the Edinburgh-based oil and gas explorer Melrose Resources with its three concessions and very strong profits; the biggest South Korean investment in Bulgaria to date – the largest photovoltaic park in the Balkans near the village of Samovodene and the town of Zlataritsa, and the partnership between Toshiba and Westinghouse with a large number of projects to be realized in the upcoming years.

Myonghi Kim, Director General of Korea Trade-Investment Promotion Agency, spoke about Korea's investment interest toward Bulgaria, stressing that in the last several years this interest is constantly growing.

Kim listed renewable energy sources, environmental projects, IT, and medical technology is priorities for Korean investors.

She informed that 2 Korean companies are currently bidding for the project for the construction and maintenance of the "Luda Yana" dam, which is going to be financed by the EU and the World Bank.

"Why Bulgaria? The Bulgarian market is small but also developing; the high quality and low labor costs make it the most competitive in the entire EU," Kim concluded.

The First International Investment Conference "Bulgaria: Business Up" started in the Bulgarian capital Sofia on Friday.

"Bulgaria: Business UP" is a new initiative designed to analyze and promote Bulgaria's advantages as a foreign investment destination.

The goal of the "Bulgaria: Business UP" investment conference is to present to the international business community the highly favorable investment climate in Bulgaria as well as the variety of opportunities for successful and sustainable business that the country has to offer.

"Bulgaria: Business UP" is organized by Novinite.com (Sofia News Agency), the largest Bulgarian English-language media, and Novinite.bg, a Bulgarian-language news website, together with the InvestBulgaria Agency.

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