Банкеръ Weekly



One of the biggest rating agencies in the world, StandardPoor's, assiged an international credit rating of BB to the Maritsa Iztok 2 thermoelectric power plant. It is only one level behind the evaluation of Bulgaria's international liabilities, which is presently BB+.Compared to the other energy companies in Central and Eastern Europe Maritsa Iztok 2 is closest to the respective country's international rating. The Polish Elektrownia Turow, which was assigned B by StandardPoor's, is seven grades behind the investment rating BBB+ of Poland's international liabilities. Lithuania's Lietuvos Energija has been assigned ВВ-, or two grades down from the country's rating ВВ+. The good rating of Maritsa Iztok 2 and the insignificant difference from Bulgaria's rating is due to the stability and low risk within the sector, the high competitiveness of the power station as compared to the other electricity producers in the Balkans, and its strategic importance for the country and the region, the Energy Ministry explained. The rating was assigned in connection with the forthcoming project for modernization of Maritsa Iztok 2, to be financed by an export credit of EUR226MN from the Japan Bank for International Cooperation (JBIC). The credit, to be extended against State guarantees, will be used for rehabilitation of the first four tourbines of the power plant. The repair, whose chief contractor will be the Japanese Mitsui CO, will swallow a total of EUR280MN. The loan will be repaid within 15 years at a minimum interest rate and a low insurance policy. The remaining money will be ensured by own funds of the National Electricity Company (NEC) - EUR6.6MN, and the ISPA Programme. Rehabilitation should be completed within 47 months through a stage-by-stage decommissioning of units.Maritsa Iztok 2 which is the biggest coal-fueled power station in the Balkans has eight generators for production of electricity. The units' total capacity is 1,440 megawatts (four 150-megawatt and four 210-megawatt generators). After more than 30 years of operation, however, their technical characteristics have considerably worsened. And the lack of purification equipment is yet to create problems, at that not only ecological. It may become the reason for closing down some of the production capacities. Therefore, in the summer of 2003 the Government approved the export credit from JBIC and included it in the list for State guarantees. Additionally, a commitment was undertaken for not privatising the power station within the next five years. According to experts, one of the reasons for the high rating of Maritsa Iztok 2 is the modernisation project, lauched with money from JBIC. The other reason are the sulphur-purifying installations, to be assembled in units 5 and 6. The eco facility is worth a total of EUR80MN, only 10% of which will be provided by the power station. The balance will come from ISPA and the European Bank for Reconstruction and Development (EBRD). The tender for choosing the supplier of equipment will be invited in March and it should be installed within 30 months. If the two projects are completed in due term it is quite likely to assign an even higher credit rating to Maritsa Iztok 2. Experts point out this could be done also when raising the evaluation of Bulgaria's international liabilities. Anyway, it should be noted that Moody's is not in a hurry to do that. In the beginning of the week Alexander Kockerbeck, a Moody's Vice-President and Senior Analyst, announced in front of Deutsche Welle Radio that the agency was not going to change Bulgaria's credit rating within the following nine months due to continuing doubts about the competitiveness of the country's economy. The reason for that was a number of unsettled structural problems which exerted a pressure on the currency board. We would like to see if Bulgaria will manage to deal with these challenges and if there will be the necessary political concensus in the country, Mr. Kockerbeck said. Anyhow, the NEC will choose a rating agency within a few days. Three agencies participated in the procedure, NEC insiders explained, but denied to mention names. According to pundits, offers were filed by Moody's, Standard Poor's and Fitch. The hurry with NEC's credit rating is due to the projected issue of eurobonds for a loan of about EUR150MN. The money will be spent on various projects.Bulgargas will also be assigned a credit rating by the end of March. The assessment will be made by Fitch. An expert panel from the Energy Ministry is discussing the possibilities for the domestic gas monopoly to attract huge external financing. Presently, however, nobody undertakes to explain what the money would be spent on.

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