Former director of BEH and "Bulgargaz" takes over the new nuclear facilities The state company "NPP "Kozloduy" - New capacities", which is under the umbrella of the nuclear power plant, has a new management. The management board has been completely replaced and the director Valentin Iliev and members Georgi Kirkov, who was the head of Kozloduy NPP and is now on its board, and Ivaylo Ivanov have been released. The new executive director of the company, which will carry out the project to expand the plant with up to two reactors, is Petyo Ivanov. In the past, he held management positions in a number of energy companies, including heading "Bulgarian Energy Holding" (BEH) and "Bulgargaz". While combining the two posts in 2019, the anti-corruption commission found him in a conflict of interest because, as the head of the holding, Iliev had voted for himself in the appointment at Bulgargaz and had determined his remuneration. Among the other new additions to the board of Kozloduy NPP - New Powers is Alex Nestor, former executive director of the American Chamber of Commerce in Bulgaria. Until 2014, he was the executive director of the Canadian "Dundee Precious Metals" in Bulgaria, and now he is the chairman of the Canadian Chamber of Commerce in Bulgaria. Another member of the board of directors is Svilen Spasov, former consultant of the American "Westinghouse" in Bulgaria. It is this company that is currently conducting a study on the construction of one or two new reactors at a new site at the Kozloduy NPP. Spasov was chairman of the board of the Varna Shipyard in the period 1997 and 1999 and as such was cleared as a secret collaborator of State Security. The fourth member of the board is Yanko Jinkov - a businessman whose business is in the import of mineral water and wine and in real estate.
Source: Dnevnik (17.01.2024)

Bulgarian Energy Holding EAD-Sofia (04HA) Semi-annual report as of 31 December 2023 on compliance with the terms and conditions of the bond issue, ISIN XS1839682116
Source: BSE (31.01.2024)

Bulgarian Energy Holding EAD-Sofia (04HA) Semi-annual report as of 31 December 2023 on compliance with the terms and conditions of the bond issue, ISIN XS1839682116
Source: BSE (26.02.2024)

Company within months ready with the first state battery for electricity The first pilot electricity storage battery could be built this year. It is a project of the National Energy Operator (NEO) and the National Electricity Company (NEK). From NEK is the site, which will be at one of the hydroelectric plants. The data for joining the NEK system are awaited in order to announce a tender for the design, supply, installation and commissioning of the first RES energy storage facility. The battery will have a power of 1 megawatt and an electricity storage capacity of 2 megawatt hours. This micro battery can be built in 3 to 6 months. This is the first step of the National Energy Operator, which was established by BEH with a capital of BGN 30 million a year ago. The main idea was that this state-owned company would take over the construction of the large batteries that were to be financed under the recovery and sustainability plan. There are two projects for energy storage facilities under the plan. One was originally for the construction of a national infrastructure for the storage of electrical energy from RES (RESTORE) with a total storage capacity of 6,000 megawatt hours. The idea was for them to be next to the ESO substations and to store electricity as much as half of the country's consumption during the day. Funding under the plan was BGN 1.6 billion. Later, after a reduction in European funding under the Recovery and Resilience Mechanism, the amount was reduced to BGN 780 million, and the capacity of the batteries reduced by half - to store 3,000 megawatt hours. With a decision of the parliament, the grant funding instead of 100% for a project was reduced to 50%, and the remaining 50% is provided by the company that applied. A year later, the BGN 30 million provided by BEH are in the company's accounts. The director of NEO Alexander Mihailov says that the company works in two spheres. One is the storage of electricity, and the second is the production of electricity from low-emission sources. A grant agreement was signed with the European Investment Bank (EIB) for the feasibility studies. It is usually between 1 and 1.5 percent of the battery value. The EIB will select the three most profitable to finance or co-finance. If all eight projects prove viable, the National Energy Operator will apply for batteries with all of them, and half of the financing will also be sought from commercial banks. The other model for cooperation with municipalities is for the company to buy night energy at stock market prices, and to have a conditional contract with the municipality that during the day it will supply energy to its companies at the market price minus 10%, for example. This NEO model is also trying to be implemented with state-owned enterprises. We are working on a project with VMZ-Sopot, for mutually beneficial cooperation.
Source: 24 chasa (05.03.2024)

The state buys the liabilities of Toplofikatsia Sofia for BGN 1.6 billion A draft decree of the Council of Ministers proposes approval of changes in the budget of the Ministry of Energy for 2024, the ministry being additionally financed with a budget balance at the expense of the central budget in the amount of BGN 1,580,315,352. The purpose of these funds is to acquire the receivables of the Bulgarian Energy Holding (BEH) and Bulgargaz EAD from Toplofikatsia Sofia, explained the minister in resignation and added that this will be done according to the order and up to the amount according to the Law on the State Budget. He added that a positive decision on state aid regimes must be obtained from the European Commission (EC) or that the acquisition does not constitute state aid within the meaning of the Treaty on the Functioning of the European Union (EU). We have systematically accumulated a huge amount of obligations on the part of "Toplofikatsia Sofia" to the energy sector for gas supplies, said Radev and added that over the years, one part of these obligations was transferred from "Bulgargaz" to BEH, another part continues to grow and accumulates in balances with "Bulgargaz". As of December 31, the amount was close to BGN 800 million, at the moment it is again the same volume, explained the resigned Minister of Energy. His expectations are that as of March 31, the liabilities will slightly exceed BGN 800 million. This unfavorable practice ultimately leads to the impressive sum of BGN 1.6 billion in liabilities to the BEH group.
Source: vesti.bg (28.03.2024)

The absurdities in the Bulgarian energy industry continue. With a decision approved on Friday, the resigned government of Nikolay Denkov has amended one of the series of decisions in the sector, obliging "Bulgarian Energy Holding" to donate BGN 728 million to the Power System Security Fund. The strange donation was reached after the National Assembly obliged the Ministry of Finance to urgently provide BGN 1 billion to cover a deficit in the fund, which must cover the costs of liberalization of the electricity market for households. Now, however, it turned out that a local tax amounting to BGN 36.4 million must be paid on the donation. Usually the tax is paid by the recipient, but in this case the cabinet decided to oblige the donor BEH to pay it. By law, the state and municipalities are exempt from local tax on donations, but in this case the grant funding is from a commercial company to a fund. The donation itself should be made within 7 days from the day on which the Ministry of Energy will acquire the debts of "Heating-Sofia" to BEH and "Bulgargaz" for a total value of BGN 1.6 billion. There is currently no data on this operation to be finalized. No similar draft documents for entry have been submitted for the lot of the municipal company. There is no decision of the metropolitan municipal council on the subject, and the company is municipal. The scheme proposed by the "Denkov" cabinet for the transfer of loans and debts in the energy sector is very problematic, especially in terms of state aid. It is not clear whether, against the background of these questions, the caretaker government will not cancel the decree on granting 1.6 billion BGN extraordinary funds from the budget of the Ministry of Energy until receiving an opinion from the EC. The amount was ordered by the Ministry of Finance at the beginning of April, and the huge payment is one of the reasons why the parliament decided to limit payments outside of pensions, salaries and overheads. If the MC revokes the decree, another solution will have to be sought to secure funds for the Power System Security fund.
Source: Sega (12.04.2024)

"Bulgarian Energy Holding" has accepted the resignation of Denitsa Zlateva as executive director of "Bulgargaz" By decision of the Board of Directors (BoD) of "Bulgarian Energy Holding" EAD, a change was made in the management of "Bulgargaz" EAD, as Denitsa Zlateva's resignation was accepted, and Dimitar Spasov and Tatyana Petrova were dismissed from the company's Board of Directors. - Boyadzhieva. Mihail Milkov, Bianka Racheva and Marin Filipovski take their places. By decision of the Board of Directors of Bulgargaz EAD, Veselin Sinabov was appointed as the executive director of the company.
Source: blitz.bg (18.04.2024)

Bulgarian Energy Holding EAD-Sofia (04HA) Bulgarian Energy Holding EAD-Sofia presented a six-month report for the period 01-01-2024 -- 03-31-2024 for compliance with the issuer's obligations to bondholders for issue XS1839682116.
Source: BSE (03.06.2024)

Bulgarian Energy Holding EAD-Sofia (04HA) In view of a forthcoming interest payment on an issue of bonds, please, be informed of the following: - Issuer: Bulgarian Energy Holding EAD-Sofia - BSE code: 04HA - ISIN: XS1839682116 - Date of interest payment: 28.06.2024 - Coupon rate: 3.5 % - All bondholders registered with the Central Depository as of 27.06.2024 (Record Date) will be entitled to receive the payment. - The final date for transacting in bonds of this issue on BSE-Sofia, as a result of which the buyer will have the right to the interest payment, will be 25.06.2024 (Ex Date: 26.06.2024).
Source: BSE (25.06.2024)

Change in the manuals of BEH, Kozloduy NPP and TPP Maritsa East 2" Following a decision of the Minister of Energy and a decision of the Board of Directors (BoD) of "Bulgarian Energy Holding" EAD, Valentin Nikolov and Galina Todorova were elected as executive directors of the holding. Galina Todorova is a lawyer by education. She has over 15 years of experience experience in the energy industry and worked in the energy industry as director of the Legal Department at "Toplofikatsia Sofia" EAD and "Bulgartransgaz" EAD Ivan Andreev and Diyan Dimitrov, who vacated their seats on the Board of Directors of BEH EAD, occupy positions on the Board of Directors respectively. Kozloduy NPP and Maritsa East 2 TPP Jivko Dinchev was dismissed from the Board of Directors of Maritsa East 2 TPP.
Source: Trud (02.07.2024)

Bulgaria's aspiration to membership in the OECD and the explicit requirement to improve the management of state-owned companies does not particularly respect the authorities. On the boards of state-owned companies, appointments without competition continue en masse. This is shown in the annual report of the "Public Enterprises and Control Agency" on state-owned public enterprises for 2022. According to the data up to the end of December 2022, three out of three members of the "Information Service" board were elected without competition. 7 of the 7 members of the management of the state enterprise "Management and management of dams" did not go through the competition procedure. 5 out of 5 members of the board of "Bulgargaz" were also elected without competition. In the transport sector, 5 out of 5 members of "Holding Bulgarian State Railways", as well as 3 out of 3 members of the boards of "Sofia Airport" and "Plovdiv Airport", did not go through a public procedure. Competitions were not held for the management of any of the state companies under the Ministry of Sports, as here all board members - a total of 19 people in 5 companies - were elected without a competition. With the rules for implementing the law, it was practically possible to bypass the requirement for a competition with the possibility to appoint temporary holders for a period of up to 6 months. In 2022, state-owned enterprises reported a serious increase in revenues, with 171 of 265 state-owned enterprises reporting a net profit in the total amount of BGN 3.89 billion. Revenues from operating activities reached BGN 32.8 billion - nearly BGN 13 billion more than 2021, with the main contribution coming from the energy sector with total revenues from operating activities amounting to BGN 25.1 billion. The dividend paid into the state by public enterprises in 2022 is BGN 1.524 billion, with the vast majority of it is a payment from BEH - BGN 1.439 billion, including retained earnings from previous years.
Source: Sega (09.07.2024)

IMF: State-owned companies in Bulgaria are expensive, inefficient and carry risks for everyone Large companies with state participation in Bulgaria have low profitability and inefficient allocation of resources, and although they are not significant in terms of share, they play a decisive role in the production network, which can negatively affect the productivity and competitiveness of the entire economy. The level of state-guaranteed debt of state-owned enterprises is small - on average only 0.5% of GDP in 2010-21 (the average level in the EU is 9%, and in other countries of Central and Eastern Europe it is 3.5%). And the support with such guarantees due to the COVID-19 pandemic was many times lower - 0.3% of GDP in Bulgaria compared to almost 2% in the EU for 2019-2021. But there is a key point - there is no generalized information on guarantees in Bulgaria, issued by the state-owned enterprises themselves, since their activity does not require the approval or supervision of the Ministry of Finance. Thus, total liabilities averaged around 12% of GDP in 2013-2021, which could be a source of concern. This is stated in the Analysis of the International Monetary Fund "Fiscal risks of state-owned companies". The analysis is based on data from 15 companies in which the authorities at various levels have over 50% share: Energy sector (National Electric Company (NEK), Kozloduy NPP, Bulgargaz, TPP Maritsa Iztok 2, Electricity System Operator, Bulgarian energy holding (BEH), Mini Maritsa Iztok, "Bulgartransgaz"), Transport sector (National Railway Infrastructure Company (NRI), BDZ - Passenger Transport Ltd., Air Traffic Control (RVD), Transport Construction and Reconstruction (TSV), BDZ - Cargo Services Ltd., Port of Varna, Bulgarian Port Infrastructure). The total assets and liabilities of these 15 companies represent about 70% of the total for the entire segment with state participation 2015-2021, which covers about 700 companies. The general assessment for them is that the fiscal support is much higher than what they give as revenues to the budget. In 2017-19, they received subsidies, capital investments and capital transfers (direct support) and deferred tax and dividend exemptions (indirect support) of an average of 1.5% of GDP. To this they have responded with a contribution of 0.2%. Net, they absorbed 1.3% of GDP immediately before the pandemic and at the end of the last GERB government. In the first pandemic year (2020), this ratio became 2.5% against 0.1% and is an illustration of how an unexpected shock can lead to large fiscal costs for companies with state participation, the IMF says. These are companies in which 4.1% of all employed work. Their financial stability can affect the fiscal performance of the state, especially when they have incurred potentially significant costs, whether expressly guaranteed or without the authorities making a contractual commitment. In 2023-2024, the state doubled the dividend collected by these companies from 50% to 100% to support the budget, but the price for this is a risk to their investment, productivity and profitability. "Furthermore, the dividend policy lacks predictability and seems to be driven by the needs of the state budget. Such a policy reduces the incentives of companies to invest and thus has a significant adverse effect on economic activity," the authors of the report add. State-owned companies are much, much less profitable than those in the private sector. Return on assets (one of the key measures of profitability) was between minus 1% and 2% for the period 2015-2021, with an average of 10% in private. In 2022, this difference suddenly melted (9% for state-owned, 11% for private), but not because there was better management, but because of three specific companies - NEK, Kozloduy NPP and Maritsa Iztok 2 TPP, and their income from sharply increased energy prices due to Russian aggression against Ukraine. Return on equity (another measure of profitability, measuring a firm's ability to generate profits using its shareholders' capital) for SOEs is on average 20 percentage points lower than that of private firms. Due to the specifics of many state-owned enterprises, profitability is logically lower than that of private ones, but in countries with better management results, the difference between them is 4 percentage points or five times smaller than in Bulgaria, the IMF recalls .Everyone suffers from the bad management of business with state participation. Six state-owned enterprises have been facing short-term challenges in meeting their obligations for years. In the period 2015-2022, without sufficient liquid assets to cover the amounts due to creditors in the next 12 months were National Railway Infrastructure Company, TPP Maritsa Iztok 2, National Electric Company, BDZ - Passenger Transport, BDZ - Freight Transport and Transportation Construction and Reconstruction. Bulgargaz faced a liquidity crisis in mid-2022 due to low collection of receivables and arrears from Toplofikatsia Sofia. Accumulated arrears to suppliers were paid through a (bridging) loan and/or state aid. Another indicator of concern to IMF analysts is the high debt-to-asset ratio (ie, less financial flexibility) of several large state-owned enterprises. These are, for example, "Bulgartransgaz", National Railway Infrastructure, Bulgarian Energy Holding and Electric Power System Operator. It has also seen how debt-to-asset dynamics can change sharply - in the case of Bulgargaz, it jumps from around 45% in 2019 to over 90% in 2022. The combination of high debt and low profitability raises concerns for the ability to service the debt and therefore risks at the fiscal level, the IMF explains.
Source: Dnevnik (18.07.2024)