Банкеръ Weekly



The schedule for raising electricity prices will be ready by end-May. On Tuesday, May 21, the Cabinet presented its energy strategy in front of the parliamentary groups of the National Novement Simeon II (NMSII) and the Movement for Rights and Freedoms (MRF), but the MPs refused to approve the rates of the projected price increases till 2004 - two 15-percent hikes and one 10-percent hikes. Tensions went high when the Energy Minister Milko Kovachev informed about the calculations and analyses, made by his experts, according which electricity prices should go up 20% this year. Otherwise, the companies in the sector are threated by decapitalization. This was flatly rejected by MRF's representatives who left the meeting earlier. Thus, following the battles with the IMF Mission, the Government's economic team will have to hold negotiations with the parliamentary majority.The final agreements will be reached next week, most probably when discussing the Cabinet's energy strategy at a plenary session. Till then the budget allocations for the package of social energy measures will be specified. The Government relies on financing from the World Bank as well for the purpose.Meanwhile, the price policiy in power engineering divided experts in the branch in two conflicting parties. Representatives of one of them claim that there are sufficient reserves along the production - transportation - distribution chain, which could reduce electricity prices. Their opponents accept most of the arguments, but interpret them reversely, warning that successive technical and technological collapses await us if there is no hike.The main discussion is how far a how the economic dispatching will be introduced, under which the power stations generating the cheapest electricity would be included as a priority in Bulgaria's energy system? Economic dispatching is of major importance for the management of energy flows in the national systems of all countries with developed market economies. The former government and the incumbent Cabinet have been also proclaiming it as such, but its real implementation is nevertheless being delayed. The Kozlodoui N-plant for example, whose production had been the cheapest so far, sold only 19 billion kWh of electricity to NEC in 2001, while its generation capacity is some 24-25 billion kWh.It is an indisputable fact that all Bulgarian power stations were paid off years ago and do not have credit or other financial liabilities. This automatically eliminates one of the components in price formation and should result in a reduction of the final price, upholders of cheap electricity underline. For their opponents, however, the outdated technical and technological equipment of the power engineering companies is one of the reasons, necessitating the price rise of electricity.

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