Банкеръ Weekly

Briefs

THE SCHEME FOR THE ELECTRICITY AGAINST CONSTRUCTION BARTER DEAL WAS MISTAKEN

The problems regarding the cancelled export of Bulgarian electricity to Turkey are not due to the intergovernmental agreement of 1998, but to the entirely mistaken scheme for the implementation of arrangements in it, a member of the Cabinet said in front of the BANKER weekly. According to him, the long-term contract for the export of Bulgarian electricity is advantageous to both countries. Annual export of electricity for about USD150MN bring the National Electricity Company (NEC) net profit between USD50-70MN (in fact the amount which the company brings to the budget each year is also between USD50-70MN). Ankara, on its part, solves its problems connected with the shortage of electricity, at that at quite an advantageous price. The price, fixed in the long-term contract between the NEC and the Turkish TEAS is 3.56 cents per kilowatthour, but during the next heating season Turkey might be forced to import considerably more expensive electricity. According to the Cabinet's member, the argument between Sofia and Ankara could be easily solved if both debatable subjects - the construction of the Gorda Arda hyrdoelectric cascade and of the Orizovo - Kapitan Andreevo section of the Maritsa motorway - are placed on purely economic grounds. The specific features of both projects should be taken into consideration and the public investments in them should be separated from those of companies. Practically, the Gorna Arda project includes the construction of the dam wall together with the adjacent infrastructure and the hydroelectric capacities. Both in its essence and regarding the set targets, the first undertaking is entirely of public intrerest. And the electricity capacities are an object of company investments with a specific term of redeemability and generated profit. The entire construction will amount to USD300MN (USD150MN for the infrastructure and the energy part each). The NEC can build the cascade by its own funds or seek an investor, as the separation makes the Gorna Arda project quite efficient. According to preliminary estimates, the price of electricity will cost between 4 - 6 cents per kilowatthour. There is a candidate co-investor as well - the Italian energy company Enel. The new capacities (or part of them) will be included in NEC's assets. This would increase the credit rating of both the company and of the entire Bulgarian energy system.The money for the public part of the project (the dam wall and the infrastructure) should come from the state budget. Such a decision is not only in compliance with Bulgarian legislation, but is to the country's interest as well. It is possible for part of the budget financing to be at the expense of a reduction of the annual tax, due by NEC. Such a scheme was used for the expansion of the transiting network of Bulgargas, financed by the tax for gas transiting. Some of the money for the construction of roads near the dam and infrastructure could be entered as capital expenses in the expenditures side of the Republican budget. And the balance of necessary money could come from the EU's pre-accession funds. If the joint venture (JV) between the NEC and Jeylan Holding builds these facilities with money from the budget and from the EU, the tenders will be obligatory. Thus, all suspicions about possible abuse and draining of money, shall be eliminated. The same scheme could be applied in the construction of the Orizovo - Kapitan Andreevo section of the Maritsa motorway. It could be also constructed with money from the budget and the EU, at that in compliance with the provisions of the Public Procurement Act and the rules of the EU. That means that the render procedures for picking up sub-contractors would be absolutely transparent. At the same time, the chief contractor could be the JV between the state-owned Avtomagistrali (Motorways) and Jeylan Holding, which is still waiting its registration. In that way the clauses in the two intergovernmental documents, signed in 1998, will be punctually fulfilled.

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