Банкеръ Weekly

Briefs

ENERGY MINISTER KOVACHEV PUSHES NEGOTIATIONS BETWEEN NEC AND HORIZON

Energy Minister Milko Kovachev has assigned his deputy Ilko Yotsov and the head of the ministy's Electricity and Heat Enеrgy Department Dimiter Kishkilov to mediate in the negotiations between the US company Horizon Energy Development and the Bulgarian National Electricity Company (NEC) for the Sofia thermoelectric power plant (TPP). The news was broken on Tuesday (December 7) by the Vice President of the American company Bruce Hale after his meeting with minister Kovachev. For a second year now the project for the construction of a new capacity with a combined production cycle (heat and electricity power) on the site of the Sofia TPP is slipping. The main reason is that the executors - Horizon and NEC - fail to reach an agreement about the price at which the generated electricity would be purchased. Mr. Kovachev gave his recommendations to NEC that negotiations for the contract should be completed as soon as possible, which is very important to us, said Bruce Hale. It is expected that with the assistance of the two mediators the contract's parameters would be specified in the beginning of 2005. Horizon's project for Sofia TPP is worth EUR100MN, of which 30% will be invested by the US company and the balance will be attracted financing. The project envisions the construction of two gas and one steam turbine with an aggregate capacity of 100 megawatts. It is this indicator that turned out to be the main stumbling stone. Under the Energy Act, the electricity produced through cogeneration is purchased at preferential prices, but only from plants of up to 50 megawatts capacity. For the time being it is cleat that NEC will be paying us BGN80/megawatt for just half of the power station's capacity, and the remaining quantity will be bought as per the expected new agreement with NEC, Mr. Hale specified. In his view, the project could be completed financially within a six-month term after the agreement is signed. Afterwards, some 14-18 months will be needed for preparations before construction begins.

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