Банкеръ Weekly

Briefs

MINISTER OVCHAROV TO SET A MEGA ENERGY COMPANY

After the Maritsa-Iztok mines another five state-run firms in the energy sector have new managements as of the beginning of this week. These are: the Bobov Dol and the Pirin mines, as well as the three coal-fuelled electric power stations in Rousse, Varna and Bobov Dol, slated for privatisation by the former cabinet. There are no motives for the new appointments in the orders, signed by Minister of Economy and Energy Roumen Ovcharov. It was just announced that the replacements were aimed at improving the companies' management. It became clear as well that of all the five changed boards only the ex heads of the mines and of the Bobov Dol thermoelectric power plant (TPP) had not been relieved of responsibility. The reasons are that all contracts, closed in recent years will be carefully checked. Some of them were described as scandalous, a member of minister Ovcharov's political cabinet said for the BANKER weekly. According to him, there were a number of signals about violations and abuses on the part of former execs of enterprises, especially in the delivery of coal to the Bobov Dol TPP. Therefore, one of the tasks of the new managerial teams will be to make a detailed analysis of the activities of their predecessors and in addition to the signals for violations they should also focus on the production process and the ways for improving it.
That task might turn out quite difficult for the new managers of the Bobov Dol mines, especially the second part of it. Simply because only one of them is experienced in mining, and the others are rather party representatives. Kiril Negrevsky is the only expert, an employee of the Energy Ministry, who was so far in the boards of the Hristo Botev and the Piriin mines. The strength of the other new BoD member, Dimiter Ganchev, a former mayor of Bobov Dol, will be in checking the contracts, closed by the former management. It will be probably most difficult for Plamen Evtimov Karpuzov, owner of the Kyustendil-based Sole Trader Tanya 91 firm, specialized in taxi transportation. His experience in mining has been only as a liquidator of the declared insolvent Kolosh mine.
The former managers of the Bobov Dol TPP - Atanas Vukatchiev, Kiril Petrov, Ivan Yurukov, and Snezhana Todorova, have not been relieved of responsibility for their activities in 2005 either. Only Mirela Anastassova, head of the legal department in the Energy Ministry and BoD Chairperson, kept her post. The new BoD members are: Valentin Kyurchiyski, Valdimir Dimitrov, Spas Stankev and Bozhan Bozhanov. The comments were that minister Ovcharov had chosen experts in this case, although some of the newly appointed board members were quite a surprise. Only the appointment of Bozhan Bozhanov, a long-time employee of the power plant and its former head during Mr. Ovcharov's first mandate as a minister was expected. Back then the other new director of the power station, Spas Stankev, was a left-wing deputy from the BSP-dominated 37th National Assembly. The appointment of the new Executive Director of the Bobov Dol TPP - Vladimir Vladimirov, so far a municipal councillor from the BSP in Doupnitsa - is also an expert and a political one at the same time. He used to be a head of a workshop in Energoremont - Bobov Dol, while the enterprise was state-run, and worked in the private business afterwards. The most curious appointment is that of Valentin Kyurchiyski, whose experience is rather in the sphere of taxi services. He is the owner of Sole Trader Valdani company, registered in the Kyustendil Regional Court back in 1992 and based in Sapareva Banya, whose only subject of activity is taxi passenger transportation.
The new boards in Bobov Dol will face many problems, indeed, energy experts note, and each hindrance to one of the companies will invariably reflect on the other one as well. Because the mines are among the main suppliers to the TPP, and the equipment in both the gangways and the energy units is outworn and obsolete. The power station, which is one of the oldest on the Balkans, is among the main air polluters in Bulgaria, emitting sulphur and ashes. And its financial flows are such that the repair, modernization, and installation of purification equipment could be effected only with the help of an outside investor (or at the expense of the State budget). An investor is unlikely to turn up soon as the prosecutor's office has banned any actions regarding the power plant's sale, and the Greek state-run company РРС has appealed in front of the Supreme Administrative Court (SAC) the suspended privatisation procedure.
Another big question to the Bobov Dol TPP is that if it is not modernized till January 1, 2007, its first unit will have to be decommissioned. That will still further worsen the enterprise's financial situation and will most probably make the electricity generated there unsellable. Things get more complicated due to the fact that the coal from the nearby mines is low-calorie and with a high ash content, and all other mines in the region are controlled by the businessman from Samokov Hristo Kovachki. By their mass protests last summer his people unambiguously showed they would not allow to change the fuel used by the TPP (by natural gas, for instance) or to use imported high-calorie coal in the station.
It will be much more easier for the new management of the Varna TPP. The more so as its sale to the Russian joint stock company United Energy System (RAO UES) seems foreordained. Therefore, the mandate of the newly-appointed Ivan Buchvarov, Rossen Simitchiev, Nikola Dimitrov, and Ancho Lazarov, could be quite short-term. In fact, some of them will most probably keep their positions after the deal is signed, branch insiders predict. The new Executive Director Ivan Buchvarov, who was so far deputy head of the coal supply to the TPP and once was Roumen Ovcharov's fellow-student will probably stay with the Russians. The other one who stands such chances is Ancho Lazarov, who was until now a deputy director.
The least replacements were made to the boards of the Pirin mine and the Rousse TPP. Kiril Negrevsky, who has been appointed to the Bobov Dol mine, will be succeeded to the post by his colleague from the ministry, Kalina Trifonova. Only two persons have been replaced in the Rousse station. The new ones are Ivan Ivanov and Ventsislav Kalchev. What is interesting in the case is that the latter is owner and manager of the Rousse-based Sole Trader Vulk Express, with subject of activities ...taxi passenger transportation. It is hardly an accidental coincidence that the newly-appointed heads of three of the big domestic energy companies (the mines and the Bobob Dol and Rousse TPPs) are sole traders, engaged in private taxi services. A bright future awaits these enterprises, at least regarding transport activities.
However, the perspectives in front of the biggest companies in the branch - the National Electricity Company (NEC), Bulgargas, and the Maritsa Iztok-2 TPP cause anxiety. According to expectations, the entire managerial team of the power station will be replaced first of all. Mr. Ovcharov's first visit after he took office was to the Maritsa-Iztok complex, and his reproaches were directed to the delayed modernization and reconstruction of the energy units. Maritsa Iztok-2, which is the top (and comparatively the most up-to-date) coal-fuelled power station on the Balkans, is quite an appetizing bite, and the programme that is currently being implemented there is worth EUR200MN-plus. That is why, it will be quite difficult for Mr. Ovcharov to reach an agreement with both his coalition partners and party-fellows about the TPP's new execs.
It will be still more difficult to appoint NEC's new executives. And it's already certain that its BoD will be entirely replaced, especially after this week's scandals about the secret sale of NEC's resting houses. Practically, the merit for the sale goes to the former energy minister Milko Kovachev and his deputy Angel Minev, who is also NEC's BoD Chairman. Anyway, the decisions about the sale were made unanimously by all BoD members, without any objections or dissenting opinions, the BANKER weekly learnt. According to pundits, minister Ovcharov has so far presented to Premier Sergey Stanishev two lists of proposals for NEC's new BoD members, but they have not been approved by the coalition partners. Both lists, however, included the name of Mardik Papazian, a former manager of the Electricity Distribution utility in Plovdiv, who is presently a consultant to its new owners from EVN. Mr. Ovcharov used to work with him in Kozlodoui when the N-plant'a units I and II were put in operation.
No matter how difficult the personnel problems might be, they will be settled more easily than the structural ones, about which those in power argue. Mr. Ovcharov's proposal, said to be supported by MRF leader Ahmed Dogan, as well, is to merge the NEC and Bulgargas in a single company. One of the options even projects that it should also incorporate the Maritsa Iztok-2 TPP, the Kozlodoui N-plant, and possibly the Bobov Dol and Rousse TPPs (if they ae not divested). The mega energy company is projected to remain state-owned as well, to invest in the Belene N-plant and become it co-owner. The adherents to that idea argue that it is the only way for the Bulgarian power engineering to be competitive after the liberalization of the regional energy market in 2007. Otherwise, foreign energy giants would very quickly bring the separate enterprises to bankruptcy and buy them for a mere song. If that happens not only the country's energy policy, but its entire life as well would be managed by strangers.
Such arguments do not lack logics, only if they were not voiced by representatives of the leftist Government, with a proven partiality to a certain country and to a Bulgarian economic group with assets in the energy sector. Therefore, some people in the branch are worried that if such a mega company is established, it will be rather fulfilling Moscow's orders, rather than those of the Cabinet in Sofia. And it will be managed by the circle around Bogomil Machev, whose firms have blocked not only the entrance and exit of the Maritsa Iztok-2 TPP. Their opponents, on the other hand, point out that Mr. Ovcharov's and Mr. Manchev's roads went apart recently and instead of looking to the East, BSP's Deputy Chairmen turned his eyes to the West. In the months to come we'll see which of these predictions comes true. Or shall those who believe that the future mega company will include representatives of the private taxi transport in its management, prove correct?

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