Банкеръ Weekly

Briefs

DIRECT SUPPLIES OF ELECTRICITY BEGIN

The schedule for opening the electricity market has already been prepared and approved by the State Agency for Energy Regulation, its head Prof. Konstantin Shoushoulov announced. After July 1, 2003, the so-called privileged clients, that consume more than 100 gigawatthours of electricity annually and have been prompt payers to the Natonal Electricity Company (NEC), will be able to close direct contracts with some of the electricity producers. Presently, ten companies satisfy these requirements: Maritsa Iztok Mines AD, Stomana Industry - Pernik, the copper smelter KZM - Plovdiv, Assarel-Medet, Elatsite-Med, Umicore, Agropolychim, Devnya Cement, LUKoil Neftochim, and Neochim. The consumption accounts for about 15% of the local electricity market. In 2004 the threshhold for privileged consumers will be lowered to 40 gigawatthours. Then the iron and steel works Kremikovtsi, Solvay-Sodi, the Bulgarian State Railways (BDZ), and several more Bulgarian companies with high proceeds could be added to the list. The opening of the electricity market will continue till 2007 when the threshhold for dirtect negotiating with electricity producers will be cut down to 1 gigawatthour. The described liberalization has been projected in the new Energy Bill, that will be probably discussed by the Council of Ministers in the beginning of May, the Director from the Energy Ministry Ivanka Dilovska specified. Under the draft, the NEC shall retain its monopoly in the export of electricity untll Bulgaria's accession to the European Union (EU). Afterwards, the Bulgarian companies will be allowed to close contracts with foreign producers and suppliers of electricity. However, it will be obligatory for the respective foreign company to be from a member country of the EU or from a country that acknowledges European legislation. Household consumers will also be allowed to choose their electricity supplier.Judging by the forecasts of the Bulgarian Interanational Business Association (BIBA), the number of privileged consumers after the completion of liberalization, will total about 1,200 companies that wil be consuming more than 80% of the electricity, traded in Bulgaria. The opening of the market as of July 1, 2002, will influence basically the interests of the national monopolist in the transition and trade in electricity, because the most solvent clients will have the opportunity to step onto the domestic market and negotiate themselves the quantities they need. However, according to BIBA's expert Nikolai Minkov some difficulties will arise. Currently, a large part of the companies that are potential privileged consumers are not showing interest towards the opportunities for making direct deals, he says. They do not have drafted a corporate strategy for active participation in the liberalized market yet, and most of them do not have well-qualified experts, acquainted with the progress of reforms in the energy sector, Mr. Minkov points out.

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