Mass bankruptcies because of the gas crisis Bulgarian companies may hit the rock bottom because of the gas crisis as many of the installations operate only with the blue fuel, said the head of Confederation of Employers and Idustrialists in Bulgaria, Evgeny Ivanov. According to him the losses each day reach half a billion. In the next few days several of the leading metallurgical companies in the country may go bankrupt, said the CITUB union leader Vassil Yanachkov. They are Stomana Industry SA in Pernik, Promet in Bourgas, Shoumen-based Alcomet, Sofia Med and Steelmet in Sofia. Only a few installations operate on gas at Kremikovtzi, however, the supply as at minimum and in case of further decrease of the gas supply, emergency situations and ecological crisis may occur, the union said.
Source: Novinar (08.01.2009)

Bulgaria will insist on direct contract for gas supply with Gaspromexport during the official visit of Bulgarian president in Russia, executive director of Bulgargas Dimitar Gogov announced. For the first time in ten years, Bulgargas expects loss of BGN 120 million for 2008. By end of January, debt to the company reached BGN 470 million, the highest debtors being Sofia Toplofikaciya with BGN 327 million and Kremikovtzi with BGN 78 million.
Source: Pari (04.02.2009)

Bulgarian Energy Holding posts BGN 154m pre-tax profit Bulgarian Energy Holding, the mega structure bundling the country’s major energy assets, booked a pre-tax profit of BGN 154 million for 2008, under preliminary data. The main contributors were the state-controlled power company NEK, coal-fired power plant Maritsa East 2 and nuclear plant Kozloduy. Another shot in the arm were the higher electricity prices. The structure, which was set up last summer, brings together the country’s biggest coal-fired power plant, the state-owned Maritsa East 2, coal miner Maritsa East, Kozloduy nuclear plant, state-run gas distributor Bulgargaz, Bulgartransgaz, telecom services provider Bulgartel, national power grid operator NEK and the Electricity System Operator. BEH said it expected profit will increase to BGN 471 million in 2009, and revenue will gain BGN 292 million to BGN 5.9 billion. The structure’s long-term bank debt totaled BGN 1.7 billion, but new loans will be sought to back a BGN 2 billion investment plan. Bulgargaz swung to a loss of BGN 118 million from a pre-tax profit of BGN 90 million in the previous year, blaming high gas prices and costly delieveries from Gazprom. Kozloduy NPP turned out to be the gem in the structure, posting a record-shattering profit of BGN 81 million against a BGN 27 million target. The growth was driven by buoyant sales on the deregulated market, where the plant sells 40% of its output.
Source: Dnevnik (05.02.2009)

Heating utilities should be able to turn the tap on buildings with many debtors, the association of heating utility companies proposed. The firms’ debts to state-run gas company ran at BGN 379 million in end-January, with Toplofikatsia Sofia generating BGN 327 million of the total. Ramadan Atalai, chairman of the energy parliamentary committee, proposed last year that utilities should be able to cut supply to buildings where two-thirds of the homes have delayed bills over two months. After the proposal came to nothing, the ministry advised utilities to hire debt collection companies or sell debts to banks. Legislative amendments are vital for debt collection, said Toplofikatsia Sofia executive director, Petko Milevski. The company purchased BGN 20 million worth of black oil in January when a pricing row between Russia and Ukraine cut gas supplies to a trickle. The current liabilities of the Sofia utility balooned to BGN 212 million in end-January, Milevski said.
Source: Dnevnik (05.02.2009)

Loss of Heat Supply-Sofia will be over BGN 3 mln because of the temporary usage of oil residual during the gas crisis, said the head of the utility, Petko Milevski. He said that the exact loss as a result of the crisis is yet difficult to be calculated. An accurate figure may be expected as early as May. Heat Supply-Sofia did not surpass the ecological standards for oil residual usage, Milevski added.
Source: Trud (23.02.2009)

? Ecologival disaster will emerge if we go on oil residuals again, said the head of Heat supply-Sofia, Petko Milevski. The Company has not surpassed the environmental norms in the use of fuel residuals during the gas crisis, explained Milevski. However, it is near the permitted limit, and if it is necessary to go on fuel residual again, it will be a problem. "Environmental standards are given to us for 365 days each year. By this time the permitted level has not been reached, but we are close. ‘It moght be a problem with any purchase of emissions at the end of the year. If there is a new gas crisis, from an environmental point of view, it would be a disaster’, said Milevski. He explained that at full power the Sofia-based company can work 10 days on residual within one years. In a further use of oil residual we have probably 3-4 days to work without penalty, he said.
Source: Standart (23.02.2009)

Lower Central Heating Bills A surprising gift warmed Sofia citizens in the midst of February cold. "The higher central heating prices would be abolished backdate," said Bulgaria's Minister of Energy and Economy, Petar Dimitrov. "At the beginning of this year the prices of central heating were increased by 18.7%, which led to monstrous January bills. These will be recalculated and consumers will be compensated," Dimitrov said. Every subscriber will receive a letter reading detailed instructions on the compensation which will be done via deductions from incoming bills, according to Petko Milevski, head of Sofia Central Heating Company. If a flat has used the same amount of heating in January and February and the first bill was for BGN 200, for the second one it will be BGN 125.20. "It is inadmissible that Sofia citizens pay that much when prices of petrol and alternative fuels which determine the gas prices, go down in price," Minister Dimitrov said.
Source: Standart (25.02.2009)

Utility companies CEZ, Toplofikatsia and Sofiagas will be charged by the Sofia municipality for building grids on municipal property, under a new ordinance being discussed. Under the proposal, energy companies will pay BGN 1 per running metre per year to build new grids or expand existing capacities, said chief secretary Rosen Zhelyaskov. The fee will slightly raise customers’ power, heating and gas bills as it is an operating cost for the firms, he explained. Companies will pay the charges before obtaining building permits and size will differ in zones, with BGN 0.80 proposed for municipal land in smaller villages and BGN 0.50 for pavements, streets and properties outside the city.
Source: Dnevnik (19.03.2009)

The danger for a range of heating plants in Bulgaria to remain without gas supply is very real. This said the chairman of the Association of the heating plants companies Valentin Terziiski. What is to happen on 2nd April is suspension of the natural gas supply after the State Committee on Energy and Water Regulation issued a prescription to Bulgargas to stop the gas supply for the enterprises, which do not pay their obligations. The watchdog’ list of the debtors includes Heat Supply-Sofia, Heat Supply-Burgas, Heat Supply-Pleven, Heat Supply-Veliko Tarnovo, Heat Supply-Vratsa, Heat Supply-Shumen as well as the metallurgic enterprise Kremikovtzi.
Source: 24 chasa (01.04.2009)

The Bulgarian Energy Holding (BEH), the catch-all mega structure of key state-run energy assets, has acquired around BGN 215 million of the BGN 328 million total debt of the Sofia heating utility to gas retailer Bulgargaz, a source close to the deal said. Last year the Bulgarian government allocated BGN 215 million to helping the utility get back on its feet. Toplofikatsia Sofia has current gas liabilities of some BGN 140-150 million. Last week the supplier threatened the utility it would turn the tap unless it pays down its debts, prompting it to give it some BGN 38 million. Last year a separate BGN 110 million was moved to a deferred payment scheme over a five-year period. The acquisition practically makes BEH a shareholder in Toplofikatsia Sofia. BEH executive director Galina Tosheva confirmed the deal has been signed and the company was now awaiting energy minister Petar Dimitrov’s decision on its participation in the utility.
Source: Dnevnik (06.04.2009)

Heat Supply – Sofia has overcharged its customers with a total of BGN 1.6 bln in the period 2003-2006, according to calculations of the Consumer federation. According to the executive of the federation, Pavel Karlev, the heating utility includes more energy in the bills than the real consumption. Karlev said that lots of households have quit using the service of Heat Supply – Sofia and in the same time the company reported growth of the heat energy supplied to the consumers.
Source: Novinar (17.04.2009)

The company is registered in Territorial administration Big taxpayers and insurers towards 2009, 04.30
Source: Tax Administration (30.04.2009)

Heat Supply-Sofia reported the successful implementation of its five-year rehabilitation program of EUR 90.66 million. The project is financed by loans – EUR 15 million from the World Bank, EUR 26 million from the European Bank for Reconstruction and Development and EUR 26.4 million from the International Fund for the closure of Kozloduy NPP. Part of the resources in the period 2003-2009 was used for the replacement of 6840 subscriber stations. In these buildings heat losses have reduced on average by 22%. About 6000 other subscriber stations were upgraded with funds of the company. Another 2000 remain, for the replacement of which EUR 10 million are required.
Source: Trud (21.05.2009)

Bulgargaz, the state-owned gas distribution firm, said that it posted a 91 million leva loss in 2008, as opposed to 87 million leva profit for 2007. The loss was reported despite a 29 per cent increase of annual turnover. Revenue from natural gas retail rose by 27 per cent to 1.57 billion leva, but the company paid 1.81 billion leva to buy natural gas, 241 million leva more than it actually managed to sell on the domestic market. Transit revenue figures stood at 140 million leva in 2008, an 8.42 increase as opposed to 2007, despite dwindling transit traffic as supplies to Greece fell by 9.44 per cent and a 1.62 per cent decline in supplies for Turkey. But the main reason for the net loss were the debts owed by utility companies. At the end of 2008, Toplofikatsiya Sofia owed Bulgargaz 268 million leva, which has been covered partially since then. Bulgargaz is also due 9.5 million leva from Toplofikatsiya Pernik and 196 000 leva from Toplofikatsiya Shoumen. All three heating utility companies are currently state-owned.
Source: investor.bg (01.07.2009)

The Bulgarian Supreme Administrative Court has confirmed the decision of the Commission for Protection of Competition to fine Heat Supply-Sofia SPJSC with BGN 375 000. The violations that the heating utility have done are illegal central heating cut, and other payment violations, officials reported. The Court has ruled that it is irregular, and inappropriate to cut the heating of a whole block of apartments when not all of the people living in it have not paid their bills. Those who have paid should not suffer because of the others. Only in 20 one out of 51 buildings where the central heading has been cut, all of the subscribers owe money to Heat Supply-Sofia. Central heating cut can be only used only if all other measures regarding regular payment have been used.
Source: Novinar (22.07.2009)

Bulgaria’s new energy ministry to probe into big projects The Ministry of Economy, Energy and Tourism will launch an investigation into the large-scale energy projects such as the Belene nuke plant and the Burgas-Alexandroupolis oil pipeline, said the new minister, Traycho Traykov, who took over from Petar Dimitrov on Monday. Traykov assured the new ministry would not put a single project on standby before it studies its economics and the legislative provisions. “Unfortunately, one could work effectively only for 20 hours and therefore I could not provide a concrete timeframe for checking the large-scale infrastructure projects,” Traykov explained, adding that most importantly they should be profitable for Bulgaria and benefit the Bulgarian citizens. The new minister said he has already proposed the members of his team but the candidacies are still pending approval and his deputies are most likely to be announced by the end of the week. “My colleague definitely takes up the toughest ministry at a very tough time,” said Petar Dimitrov. Excluding the effects of the economic turmoil, Bulgaria boasts some of the most favourable economic climate, he stated. Traykov turned out to hold a different view, saying one of the top priorities of his ministry will be polishing the country’s reputation as a symbol of corruption, which is seriously undermining business climate. Petar Dimitrov expressed hopes the new administration will preserve the structure of the Bulgarian Energy Holding (BEH), which now lumps together the country’s main energy assets, saying it “very much facilitates energy management in the country.” “BEH should be listed on the stock exchange and there is no question about it; the problem is that this cannot happen immediately,” Traykov said. He was adamant that the Sofia heating utility should go private but provided neither timescales, nor possible methods.
Source: Dnevnik (28.07.2009)

A strategic investor could be invited to rescue Sofia’s debt-saddled heating utility, said energy minister Traycho Traykov, adding that the company has attracted suitors despite the crisis. Toplofikatsia Sofia has piled up a loss of BGN 60 million after in January former energy minister Petar Dimitrov chopped heating rates in the Bulgarian capital by 19% ahead general elections. Traykov did not rule out the possibility for tossing the company back to municipal ownership. Following drawn-out disputes over refuse collection, last year the municipal authorities transfer the majority share to the state. The new minister said legislative amendments are needed to enable the heating utility to collect its dues from delinquent customers.
Source: Dnevnik (04.08.2009)

Income of the Privatization Agency for 2009 and 2010 may reach BGN 880 mln if the State manages to sell Bulgartabac Holding JSC, Heat Supply-Sofia SPJSC, Vazov Machine Works SPJSC, Kintex SPJSC and its minority stakes in the electricity distribution companies. The Agency reported BGN 17.6 mln income for the first half of 2009 blaming the financial crisis and the lack of investors interest. PA said that the companies included in BEH may also be considered for privatization at a later stage, but such move is not planned for the time being.
Source: Monitor (03.09.2009)

Minister of Environment Nona Karadzhova sent warnings to 6 big thermal power plants that if they do not fulfill their modernization programs and reduce the polluting emissions they would follow the example of the closed TPP Republika. The modernization of the TPPs is part of the accession contract of Bulgaria to the EU. The fine would be EUR 50,000 per day. Brikel, TPP Maritza Iztok 3, TPP Varna, TPP Lukoil, Heat Supply-Sofia and TPP Mondy Packaging Stamboliyski were sent the warning letters. The Ministry added that the drop behing is biggest at two units of Heat Supply-Sofia and TPP Lukoil.
Source: 24 chasa (16.09.2009)

I hope that will finally put the economy in order Anton Petrov, chairman of the Bulgarian Association of the Metallurgical Industry Mr. Petrov, is there any development of the markets? Metallurgy first felt the crisis, perhaps the first to see improvement? - This is the question that we ask ourselves: is what we see in recent months a trend or just a the result of traditionally strong September and October. Unfortunately, they are not better than the same months last year. I think the news for exiting the recession in many Western European economies has it influence, this gives optimism among retailers and manufacturers. I really feel more optimistic about market behavior. My personal opinion is, however, that the winter will be severe once again. You say that winter will be severe. Because of the expected higher natural gas prices? -. If there was an order in the country, these questions would not be asked as there would be market mechanisms, which would set the energy prices. No secrets hidden formulas, no black boxes, of which some price must come. I personally was very troubled by the claim of the the new chief of SCEWR, because I see shadows from the past, that heat will not be more expensive, but the price of electricity and natural gas will rise. Heat energy is derived from the price of natural gas. Who will pay the price of this heat? Will it be this industry? If it is in fact the industry, how long would it be competitive, paying others’ bills? This is lack of clear rules and order. Industry must survive, it has to be competitive, to create jobs. Especially regarding metallurgy, as it creates the basis of any subsequent industry. If there is no metallurgy, there cannot be machine building, it is a chain. Have you held meetings with the new minister of economy about the problems with energy prices? - A meeting has been requested. Bulgarian Association of the Metallurgical Industry and BIA have put these issues. However, the time from the inauguration of the new government is very short, there is some momentum, but we must not close our eyes to the errors. I believe we will be heard. Such subjective measures distort economic realities, and they always come back as a boomerang with a much more serious consequences. Everybody saw what were the consequences of unjustified decision made by Minister Dimitrov for Kremikovtzi and Heat Supply-Sofia. I do not know who would hold him responsible. Who will pay the natural gas burning in the chimneys of Kremikovtzi, who will pay the BGN 50-60 million loss of Heat Supply-Sofia as it is said that the price of heat in Sofia should not be raised? It will again be the industry. And what about the reduction in carbon allowances? - Metallurgy is a big energy consumer. But not only for metallurgy, for any production in the country energy will become an increasingly important element of competitiveness in the light of developments in energy prices and global environmental initiatives such as the Kyoto Protocol. But our situation is more severe, as our economy is still not as well prepared as is Europe. Here these issues can be fatal. If the reduced emissions quotas make the industries buy extra quotas, if energy prices continue to not be adequate to the market, how long would our economy be competitive? Currently, electricity in Bulgaria is more expensive than in Germany and Italy. The price of gas is twice higher than that quoted on the stock exchange in Germany. How long will it be possible to invest in this industry? What shows the distribution of quotas of carbon dioxide to 2012 for the future of metallurgy? - Òhe ministry of environment now acts very professionally and very transparently, so I hope it keep on doing so. We should try to allocate as reasonably as possible the available allowances so that we do not have to buy. We do not want quotas to sell, but we can not afford to purchase allowances. Now, according to the new allocation plan for the period 2008-2012, many enterprises would have to buy allowances. Whatsmore - large enough quantities to turn negative the situation in these companies. We prove new installations, pay the bills and hope that they will be considered. We also hope that it will be looked more deeply into energetics and quotas will not just be distributed based on requests to the TPPs, but will take into account renewable energy sources. Because if the thermal power plants receive the current allowances, they have no incentive to expand their production and make it more environmentally friendly, with lower emissions of carbon dioxide. On the other hand, the price they give the market is monopol because electricity is a regional market - whatever price they demand we ought to pay it. Effect on other industries is doubled. Because if energetics buy quotas, they would be included in the price and will be paid by us. On the other hand we can not divert the price of quota to our clients - metals are international product which is listed on stock exchanges at benchmark prices. And as a result of the new investments made in recent years in Bulgaria, metallurgy is already high-tech. It is no more the industry from 20 years ago. What is the labor productivity in metallurgy? - I can give Stomana Industry JSC as an example. When we entered the company by acquiring its shares in 2001, it had 2500 workers and produced 550 thous tons of metal. Before the crisis, and after opening the new plant, we now produced 800 thous tons with 1100 people. At present the capacity of the plant, which is not fully used due to the state of the markets, is 1.2 million tons with less than 1000 workers. In other words labor productivity increased several times. The new facility in Pernik has labor productivity above average in the EU - over 3000 tons per person. It is one of the most modern in Europe. This should be pursued, only in this way you can survive and be compete on the international markets. And in a market economy you have to be ompetitive, to be better in order to sell. Stomana Industry won Pari newspaper’s prize for socially responsible company to employees. What is the role of social responsibility in times of crisis? - Social responsibility is a way of thinking in our company. We do it as well in the name of higher competitiveness and prosperity of the company, understanding the role of human potential. This is the strength. Anyone can buy machinery and equipment, but if the team is not trained, motivated, enthusiastic, there's nothing you can do or you achieve it much more slowly. Now in a crisis we do everything possible to retain skilled staff. We keep producing at a loss just to keep the team. When, however, we have to release workers for us it is important that they continue to regard us as a good employer. So we offered a very good program for these people – we continue to pay their health insurance payments and meal vouchers for a certain period, have conversations with banks to ease their credits, have created a cooperative for flexible employment of these people that they look for opportunities. Are there any closed metallurgical companies because of the crisis in Bulgaria? - In Bulgaria, what is closed and is in process of liquidation is Kremikovtzi, not because due to the crisis. It was only the last drop, which led to the closure of the plant. The reasons are much deeper, it is a long story. Even during the biggest boom the company was at a loss, it was drained out and abused with for years. Fortunately, to date, there are no other companies in Bulgaria that the crisis has placed on the edge of bankruptcy or are in severe financial situation. But there are the neighboring countries. For example, in Romania the Arcelor Mittal plant has a lock on the door. So our goal is to make our business as competitive as possible. Only in this way we will have an even better future after the crisis. Do you think an investor for Kremikovtzi will be found? - It is a very hard moment, but after the crisis for a part of the plant might be. I do not believe that Kremikovtzi may once again have a producing blast furnace and coke chemical mill. First, the geography is such that it can no longer afford to carry cargo from ports 500 km away, this makes it uncompetitive. The second problem is its location near the capital. I hope that it will no longer be allowed to poison 2 million inhabitants of the capital.
Source: Pari (05.10.2009)

Heat Supply-Sofia will have to return BGN 240 million to the Bulgarian Energy Holding, if the company becomes once again municipal property, said the Minister of Economy Traicho Traikov yesterday. This sum was given by the previous government to BEH for development of the heating sector. On its part BEH bought the debts of Heat Supply Sofia to Bulgargaz. Thus BEH had to acquire a stake in the heating utility, but the former Minister of Economy did not signed the documents.
Source: Monitor (06.10.2009)

The heating utility firms in the cities of Sofia, Vratsa, Pleven and Burgas may face gas cut if they do not pay their debts to Bulgargaz. I will not let the gas supply as we cannot pay in advance the gas to the Russians, said Dimitar Gogov, head of the state-owned gas monopoly. We sent letters to the heating utilities months ago alerting them about the possible gas stoppage. The total debt is over BGN 175 mln as BGN 30 mln are instantly exigible. Heat Supply-Burgas, Heat Supply-Pleven and Heat Supply-Vratsa has signed prolongations of their debts. Heat Supply-Sofia has not reached such a deal due to the change of ownership. A debt of BGN 120 mln is being extended and if the Ministry of Economy, being the owner, approves such a scheme, Sofia would have heating in the winter.
Source: 24 chasa (07.10.2009)

GDF, Dalkia eye Sofia’s struggling heating utility French gas mammoth Gaz de France and utility company Dalkia are interested in the planned sell-off of Bulgaria’s largest heating utility, Heat Supply-Sofia, energy minister Traycho Traykov said. During Traykov’s meeting with French company representatives on Monday, officials from French banks and major manufacturers have inquired after Bulgaria’s broad economy and the regulatory framework as well as specific issues, Traykov said. Gaz de France and Dalkia confirmed their interest in the privatisation of Sofia’s heating utility when it comes on the agenda. Traykov explained the government is in the process of transferring the company’s ownership back to the municipal authorities and a few more administrative hurdles need to be overcome to complete the procedure. Dalkia owns the heating utility in the Black Sea city of Varna and has already expressed interest in managing the firm or acquiring it in a potential sell-off. A few years ago, Sofia municipalities was seeking a manager for its heating company but the procedure was suspended. Gaz de France has repeatedly said it is eager to acquire the utility. It has also shown interest to vie for construction of a new gas link between Stara Zagora, Dimitrovgrad and Komotini. The Bulgarian Energy Holding (BEH) -- the catch-all structure grouping the nation’s top energy assets -- has already picked a consultant on the project and is yet to name a contractor.
Source: Dnevnik (14.10.2009)

T he government programme until 2013 does not envisage privatisation of Sofia's heating utility Toplofikatsia. A concept will be worked out for development of the company. The plan contradicts previous statements that the company must be sold. Given the current poor condition of Toplofikatsia, it is natural for the government to be unwilling to sell it, experts said.
Source: Pari (02.11.2009)

Heating prices might go up by 7-8% as of 1 January 2010 because of the forthcoming increase in natural gas costs. This is what the chairperson of the State Energy and Water Regulatory Commission (SEWRC) Angel Semerdzhiev announced. Bulgargaz said a week ago it had to put up gas prices by 17.02% to BGN 437.80 per 1, 000 cubic meters (VAT not included) because of the rise in the costs of alternative oil fuels.
Source: Sega (16.12.2009)

Heating utilities forced to invest Sofia's heating utility will have to invest about EUR 280 million in a modern 400-megawatt cogeneration facility to be able to sell electricity at preferential prices. The same holds true for all other heating utilities that have low-efficiency cogeneration facilities. From 2010 they will not receive preferential prices if their electricity/heat cogeneration installations are not efficient, the CEO of Toplofikatsia of Pleven, Valentin Terziyski, said. The revocation of preferential prices will considerably increase heating rates, Toplofikatsia of Sofia's CEO Petko Milevski pointed out. Many utilities may opt out of electricity production, because it will not longer be profitable. Currently most heating utilities rely on these revenues, Toplofikatsia of Burgas's CEO Valyo Duchev added. The utilities in Pleven, Burgas, Varna, Vratsa and Veliko Tarnovo have already invested in high-tech installations, Terziyski said. EVN Bulgaria Toplofikatsia in Plovdiv has also upgraded its cogeneration, which will allow it to meet the high efficiency requirement. Next year EVN plans to launch the construction of the most modern such facility in Bulgaria. It will generate 45 mW of electricity and 50 mW of heating.
Source: Pari (18.12.2009)