Банкеръ Weekly

Briefs

NEW INVESTORS FOR GAS NETWORKS SOUGHT

New investors for the construction of gas distribution networks in the regions of Miziya and Trakiya will be sought by the State Committee for Energy Regulation (SCER). The announcements for the tenders were published during the week on the website of the regulatory body. The candidates should be Bulgarian juristic persons. Foreign companies may bid only if they own at least 67% of a firms, registered in this country. The tender will be held in the beginning of October 2003, and the required money guarantee for participation is EUR500,000.The Miziya region includes the municipalities of Veliko Tirnovo, Pleven, Gabrovo and Lovech, and licences have been issued only for nine population centres (Veliko Tirnovo, Gorna Oryahovitsa, Pavlikeni, Lyaskovets, Gabrovo, Sevlievo, Lovech, Dolni Dubnik, and Levsky). Overgas holds almost 100% monopoly in that part of the country. The company owns six of the granted licences in the big towns, although a ga sdistribution network has been constructed only in Lovech, Pleven and Levsky.The tender for the Trakiya region is expected to attract more interest. It includes the municipalities of Plovdiv, Stara Zagora, Pazardjik, and Haskovo. The SCER has so far issued licences for gas distribution in six population centres (Pazardjik, Peshtera, Assenovgrad, Purvomai, Stara Zagora, and Haskovo). Although Overgas has already built installations in Stara Zagora, Pazardjik, Purvomai, Peshtera, and Assenovgrad, there will be severe competition for Plovdiv. The potential of the second largest Bulgarian city is sufficient to attract interest. In May 2002 Gas Distribution Plovdiv AD (80% of which is already in the hands of Overgas) won the invited competition for installation of gas supply. The result was announced by a decision the Plovdiv Municipal Council, and the winners said they would invest USD15MN-plus and would supply gas to more than 60,000 subscribers. However, the SCER refused to licence Overgas and this case was brought to the court. The future tenders present a serious problem - that concerning the licences which have already been issued, representatives of the private companies in teh branch point out. The licences are 33 in number, while the established gas distribution networks sell only 4.6% of the fuel, consumed in Bulgaria. No matter how slow the pace of household gasification, the present licence holders will maintain their monopoly rights. Licences shall be revoked only if gas distribution networks, for which feasibility studies have proven would be efficient, are not built and developed, the SCER explained. A licence should be revoked also when its holder does not conduct the obligatory feasibility studies within the terms, set in the document. The third reason for depriving a holder of a licence is quite disputable - when the study shows that the expansion of the gas network has not been economically grounded.

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