Банкеръ Weekly



Six new gas distribution companies joined Bulgargas network in 2004. They are: Sofiagas, Rahovetsgas 96, Gas Supply Rousse, Varnagas, Kamenogas, and Black Sea Technological Company, which is a licensee for the Mizia and Dobroudja gas regions. In 2004 gas consumption in Bulgaria remained unchanged from 2003 at about 2.9 billion cu m. Domestic output increased significantly within that period, rising from 9 million cu m to 329 million cu m due to the start of gas production from the deposit near the Galata Cape. Central heating utilities in the country are still the main gas consumers, but their share in the total consumption decreased from 39% to 35.1 per cent. The reasons for that according to Milen Chakurov, Chairman of Bulgargas BoD are two: the warm winter and the more efficient use of fuel by energy producing companies. Gas consumption was reduced in metallurgy as well, while in the chemical industry and all other sectors it went up. Due to the market's liberalization the first private gas supplier - the Irish company Petreco, extracting gas from the Galata deposit - sold 116 million cu m of the fuel in 2004. However, the state-owned company's share in the total sales of gas decreased by only 2.41 per cent.Gas deliveries to neighbour countries remained unchanged at 13.5 billion cu m. Decreased transits to Macedonia and Turkey were compensated by the 16% increase of quantities supplied to Greece. Under the contract signed with Gasexport on December 20, 2004, gas deliveries to Bulgaria's southern neighbour will amount to 2.5 billion cu m in 2005, going up to 2.7 billion cu m in 2007, and reaching 3 billion cu m in the 2007-2010 period. Bulgargas book profit registered a BGN32MN increase, up to BGN160MN. The company's operating proceeds rose by BGN77MN, reaching BGN995MN. About BGN262MN was remitted to the Treasury and BGN51MN was invested in the construction of pipeline deviations and modernization of compressor stations. Bulgargas investment programme for 2005 is worth BGN45MN. We have that money and we do not need external loans. But we may seek a way to increase the capital if a decision is made to construct a gas conduit to Serbia and start the implementation of the Nabuko project, Mr. Chakurov specified. A new procedure for the choice of company that will assign Bulgargas a credit rating will be probably announced as well this year, as the previous procedure failed. Deputy Energy Minister Ilko Yotsev said that one of the possibilities for the company's restructuring is to raise its equity capital (which is currently BGN1BN-plus) by 20 per cent. The situation regarding Bulgargas receivables is not so optimistic. Although it has signed repayment plans with some of its major debtors, such as the Central Heating Utility - Sofia and the Kremikovtsi iron and steel works, the company still has to collect BGN270MN as of the beginning of 2005. Total liabilities of central heating companies in the country for consumed natural gas amount to BGN40MN.In fact, the state-run company's proceeds could significantly increase this year thanks to another kind of activities. Bulgargas has about 651-km-long optic cable network which is of great interest to telecom operators. It has already closed contracts with Cabletel, Pan Tel and Orbitel for providing optic fibres of the line. Such a contract is to be signed with Netera as well. The Turkish companies Koc Holding and Zorlum have also shown interest. Soon the Commission for Regulation of Telecommunications will probably transfer Bulgargas' licence for telecom services to its 100% subsidiary Bulgartel, registered on November 30, 2004.

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