Банкеръ Weekly



After a two-week delay, on January 27 the ministers approved the letter for political support, demanded by the US company AES, which will be constructing a replacing capacity at the site of the Maritsa Iztok 1 thermoelectric power station. About ten days ago the company's management announced in Sofia they would not be able to structure the financing of the project, worth EUR1,042BN, without such a letter.AES will invest in the two 335-megawatt units of Maritsa Iztok 1 about 30% of the entire sum. The other EUR700MN will come from credits, managed by three big investment banks: ING Bank, BNP Paribas, and the French Calyon. A total of 30 credit and insurance institutions will be included in the financing. According to preliminary estimates, Bulgarian banks will ensure about EUR100MN. The Government press office specified that commitments which are not a state guarantee are undertaken by the letter. They include measures to ensure observation of the project agreements, as well as necessary activities for the successful implementation of the project. The State will provide also necessary conditions for the US company to cover its liabilities in case of a merger, incorporation, restructuring or privatisation of the National Electricity Company (with which AES has a 15-year agreement for the purchase of electricity generated by the new capacity) and of the Maritsa Iztok Mine (the contract for coal deliveries between the mines and AES is also for 15 years).It is expected now that construction of the new capacity would start at last. One of the reasons for the more than 4-year delay were AES' temporary financial difficulties resulting from Enron's bankruptcy. The last two years were mainly dedicated to negotiations between the US company, the Energy Ministry and the NEC, regarding the price of electricity, fixed in the contract signed back in 2001. In the beginning of 2005 AES reduced by 14% the price of electricity, to be purchased by NEC, but the annex has not been signed yet. This will probably happen next week.

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