Банкеръ Weekly



The term for submitting binding offers for the purchase of the three big electricity generating stations in Varna, Bobov Dol and Rousse, has been extended by almost one month. The March 30 deadline for filing offers has been changed to April 27, the Privatisation Agency (PA) announced on Monday (March 21). The extension of the term, which the BANKER weekly predicted still in the beginning of the year, was made necessary by the meetings between the candidate-buyers and representatives of the Energy Ministry, the State Commission for Energy and Water Regulation, and the National Electricity Company (NEC). The PA specified that the subjects discussed during these meetings were the contract and regulatory framework for the electricity generating plants, which is of particular importance for preparing the offers. According to PA's announcement, the extended term will enable the candidates to get a full idea about the market positions of the plants offered for sale and about the environment in which they will be operating. Eleven big foreign companies were admitted to the last stage of the competitions for the three thermoelectric power stations: the Russian RAO, the Italian Enel, the Japanese Mitsui and J Power, the French Dalkia, the Greek РРС, the British International Power, the US AES, and the three new owners of the electricity distribution companies - the Czech CEZ, the Austrian EVN, and the German E.ON. The PA added that talks in principle were currently held with all admitted candidates. According to experts of the Energy Ministry, things could be clearer only after the end of the conversations on the regulatory framework (due to start on Monday (March 28).The State Commission for Energy and Water Regulation announced that after being discussed with the Energy Ministry, a draft of the regulatory framework for power generating capacities, slated for privatisation, was agreed. However, commission representatives were not willing to specify the main parameters of the document, but announced that it projected a lower return on investments and lower profits for the buyers than the gains of electricity distribution companies. The final version of the document will be approved only after discussions with the candidate-owners of the thermoelectric power plants in Varna, Rousse and Bobov Dol, the State Commission for Energy and Water Regulation promised. As the BANKER has already explained in detail, the regulatory framework is of a crucial importance for preparing the offers for the three companies. In addition to fixing the level of return on investments by the new owners and their market behaviour over the following years, it should also settle the problem with the long-term contracts between the power stations and NEC. The candidate-buyers, supported by PA's consultant on the deal Credit Suisse First Boston insisted on 10-year contracts. The then energy minister Milko Kovachev, however, objected strongly, arguing that it will imperil the liberalization of the energy market. Mr. Kovachev's team hired the British law firm Nera to prepare an overall analysis of the electricity market and to work out a regulatory framework for the sector. The work of the British experts was financed by a special grant from the International Finance Corporation (within the World Bank group).

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