Банкеръ Weekly



The Bulgarian Ministry of Energy and Energy Resources proposed last week that a new holding called Electricity Producing Consolidation Company be formed. The structure will unite the Kozlodoui nuclear power plant, Bulgaria's large electricity producing heating plants (based in Bobov Dol, Varna, Rousse, and the two state-owned plants in the Maritsa Iztok complex), the Tchaira pumping and accumulating water power plant and the cascades in the Rodopa mountain. This is the best alternative for Bulgaria to keep its positions on the regional energy market after its liberalisation in 2007 and to obtain a better price in the privatisation of the various plants or stakes, the Energy Minister Milko Kovachev summarized.The establishment of the electricity producing holding is the only alternative that may help for attracting the investments needed by the branch. According to preliminary assessment of the Ministry of Energy and Energy Resources, EUR2BN will be needed for rehabilitation of the existing and the introduction of new powers. These funds can only be provided by an integrated holding structure that holds a significant amount of assets, a high credit rating, and competitive generating capacity. Otherwise, electricity in Bulgaria will grow expensive by 28% until 2015 because of the investments needed for modernisation of the sector.The holding will carry out the general investment planning, will search for financial resources, and will operate on the foreign markets. This type of structure has two great advantages - an internal and an external one. In an external aspect, the competitive power will grow many times and so will the chances of the consolidation company to get a much higher credit rating compared to the independent producers. The holding will enable each of its members (which will remain operationally and legally independent) to attract the investments needed for modernisation and also to use internal holding credits. The Electricity Producing Consolidation Company may also issue corporate bonds on both domestic and foreign capital markets. The Bulgarian energy bonds will be attractive enough, brokers from the London City who have consulted the ministry commented for the BANKER weekly. They are also supported by Bulgarian experts working in the structures of the World Bank in Washington. They claim that the international financial institutions (EBRD and the International Financial Company at the World Bank) know the project and that preliminary talks about their minority participation in the holding have been led. Undoubtedly, one of the best ways to attract capitals to the sector is to list the holding on the international markets, Minister Kovachev said. IPO is among the alternatives that offer the most significant growth, he added.During the second stage of integration, the generating powers will join resource suppliers (for example, the Bobov Dol heating plant and Bobov Dol mines, or Maritsa Iztok mines with the heating plants in the region).In the third stage, enlargement will continue. Assets of the energy sectors of neighbour countries may be acquired as part of the project, too.Even though the merger of generating enterprises is among the prerogatives of the energy minister, it is the Government that will make a decision on the establishment of the holding.

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