Energy Minister: Nationalisation of power utilities will not prove beneficial

Energy Minister: Nationalisation of power utilities will not prove beneficial

Nationalisation of the three power distribution companies in Bulgaria, owned by Austria's EVN, Czech CEZ and Germany's E.ON, was not a priority for the state and would not reap any dividend, Economy and Energy Minister Traicho Traikov told private national Nova Televisia on April 9 2010.Before becoming a Minister in the summer of 2009, Traikov was a receiver in two utility companies owned by EVN in Bulgaria.   This was Traikov's first comment since Prime Minister Boiko Borissov said on April 7 2010 that the three power distribution companies could have their privatisation contracts cancelled if they did not pay dividend due to the state over the past five years.Currently, the state holds 33 per cent in each of the three utility companies sold in 2005. On April 7, Borissov said that the Cabinet would ask for an audit of the three utilities to investigate the discrepancy between the prices at which the companies bought electricity from state-owned power grid operator NEK and the ones at which electricity was sold to consumers.Bulgarian media quoted analysts speculating that the outburst was a calculated ploy to force utilities into paying a dividend, since the companies are allowed, under the terms of the privatisation deals, an annual profit margin of 12 per cent.The dividend that Bulgaria would now receive would stand at between 250 million and 300 million leva, Deputy Economy Minister Maya Hristova told Bulgarian terrestrial television bTV on April 8.On April 8, Borissov said that much will depend on the three companies' willingness to engage in a dialogue. Representatives of the three utilities met with Borissov later the same day, but no comment was given on what had been discussed at the meeting.On April 9, Traikov said that at the beginning of January 2010 he had held unofficial talks with the three companies who had offered to pay dividends to the state for 2009.According to Traikov, all members of the Cabinet knew about these talks. He also said that if the state had received dividends it would have reaped no more than 90 million leva because the net profit of the three companies since their privatisation was about 500 million leva. Of this sum, only half was subject to dividend and a mere third would have gone to the state.The remainder, Traikov said, would have been paid to foreign shareholders and not reinvested in Bulgaria as was currently the case. He told Nova Televisia that it was better to have two thirds of the profit reinvested here instead of leaving Bulgaria for Vienna, Prague or Berlin. Still he said that, given the current situation with the Budget the three companies could pay dividend to the state.In an interview with Bulgarian National Television on April 8 2010, Angel Semerdjiev, chairperson of the state Energy and Water Regulatory Commission (EWRC), said that checks will be launched to see how the three companies had complied with their investment plans and obligations.According to him, of the three Austria's EVN had complied the most with its plans while the other two, CEZ and E.ON. had not.  According to Borissov, the privatisation contracts were signed without any clear investment obligations, hence he had asked for a probe into the work of EWRC over the past five years.The EWRC is independent by law and has the right to set energy prices in the country and control the work of energy utilities. 

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