Банкеръ Weekly

Briefs

CONSUMERS PAID FOR ELECTRICITY ABOVE ITS PRIME COST IN 2001

The government-fixed prices of electricity in 2001 have entirely covered the costs for its generation, the preliminary accounting reports of energy companies for the January 1 - December 31 period show. Moreover, each of the units along the way of electricty ended the year with positive financial results prior taxation. This applies to all major electricity producers, who reported a positive financial performance of almost BGN85MN. Most of the companies have exceeded several times the accounting profit, projected in their business plans. The leader in this respect is the Varna Thermoelectric Power Plant (TPP), whose positive financial result is above BGN13MN, instead of the planned BGN2.1MN. Maritsa-Iztok 2 TPP closed 2001 with an accounting profit of BGN22.5MN, and the N-plant of Kozlodoui posted BGN38.8MN in accounting profit, but has also rescheduled its liabilities for the year.The most impressive results, however, are those of the National Electricity Company (NEC), which pre-estimnates its accounting profit at BGN217MN-plus.Positive financial performance is registered by each of the seven electricity distribution companies, which have considerably exceeded the proceeds, projected in their business plans, and according to preliminary data they ended 2001 with an accounting profit exceeding BGN32.6MN. The electricity distribution companies posted additional profit of almost BGN7.8MN in October-December alone.The profit accumulated in this period was due to the 10% hike of fixed electricity prices, introduced by the Government on October 1, 2001. As of that date electricity prices went up from BGN0.089/kWh to BGN0.098/kWh in the daytime, and from BGN0.048/kWh to BGN0.053/kWh in the night-time. However, consumers were charged the previous (lower) rates for a period of some 15 days around Christmas, after the Supreme Administrative Court revoked the Cabinet's decree for the price increase. But as of December 28, 2001 we are again paying electricity bills as per the higher prices. They will form an additional accounting profit for the electricity companies. Official statements promise a new hike of electricity prices this year, which would result in yet higher accounting profit for the companies. A considerable part of this profit will go back to some of the taxpayers (retirees, socially disadvataged people, allowances for children, etc.) as under articles 28 and 29 of the decree for the budget's implementation (enforced on January 14, 2002) 80 per cent (instead of 30% so far) from the after-tax profit for 2001 of commercial companies with over 50% state participation (as all electricity companies are) should go to the Treasury.

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