Банкеръ Weekly



Negotiations with the creditor banks under the project for modernization and rehabilitation of the Maritsa Iztok 3 thermoelectric power station were held during the week in London. An agreement was reached between the strategic investor - the US company Entergy and the Italian energy giant Enel. The later will participate in the project by a minority share (about 22%), undertaking some of the investment risk. Entergy, however, will keep the controlling package of shares (51%) in the registered joint venture with the National Electricity Company (NEC). The capital of Maritsa Energy Company is BGN160MN.Nine credit institutions will be ensuring the project's financing. They will allocate a total of EUR350MN-plus. The European Bank for Reconstruction and Development (EBRD) will release EUR111.2MN; EUR20MN will be extended by the Black Sea Bank for Trade and Development, and the French banks Credit Agricole and Societe Generale will relase a syndicated credit of up to EUR150MN. Bulgarian banks (among them BULBANK, UBB, FIB and ROSEXIMBANK) will participate by a slot of about EUR50MN. Entergy and Enel will invest some EUR120MN in the modernization of Maritsa Iztok 3.The project's implementation should begin after the signing of contracts. The first activities will start in a few days, Entergy's Bulgarian office specified. The four units of the thermoelectric power station, commissioned in end-1981, are to be entirely rehabilitated. This would increase their capacity by 64 megawatts and the life of Maritsa Iztok 3 will be lengthened by 15 years. The state-of-the-art purification installations with which the units will be equipped will reduce the emissions of sulphur oxides by more than 20 per cent. And the annual emission of carbon dioxide into the atmosphere will decrease by 700,000 t. More than USD100MN of the earmarked funds will be invested in the power station's infrastructure and for environmental protection.Entergy showed interest in Maritsa Iztok 3 back in 1997. After long-time studies the first agreements were closed in end-1999. A JV was set up between the US company and the NEC, in which the latter participates by a contribution in kind - the power station itself. A 15-year agreement with NEC was signed for guaranteed purchase of the electricity generated by Maritsa Iztok 3. But the project came to a halt during the last year of former premier Ivan Kostov's government and the first year of his successor PM Simeon Saxe-Coburg-Gotha. The reasons could be sought both in the clumsy administration and in the numerous criticisms of the reached agreements. The long-term contract for purchase of electricity and the fixed price in it were the main targets of that criticism. But the JV with NEC and all other agreements were closed on condition that Entergy would ensure both the project's financing and implementation.The clouds over Maritsa Iztok 3 seem to be dispersing now. Entergy which has invested almost USD15MN so far continues to prove the mutual advantage of the undertaking. And the attacks against the high price are made senseless by the higher tariffs at which the NEC buys electricity from the other coal power stations. The activity of the state officials seems to have been stimulated by the expected decommissioning of the first two units от the Kozlodoui N-plant. Thus, in February 2002 Maritsa Energy Company was granted a 12-year licence for exploitation of Maritsa Iztok 3. The contracts with the major executors - the consortium between the German firms DSD and RWE were signed as well. Another contract - with Maritsa Iztok Mines guarantees a long-term supply of coal. In August 2002 the State Commission for Energy Regulation issued a permission for construction on the site.

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