Банкеръ Weekly



Plovdiv Central Heating Utility is the second largest heat supplier following the utility in Sofia. It is licensed to produce electric and heat power in Plovdiv and Assenovgrad. The company owns Plovdiv Sever thermal power plant, three heating plants - Plovdiv Yug, P.D. Petkov, and K. Raycho, as well as the regional power plant Chaika in Assenovgrad. The company has over 38,000 household and 1,121 industrial subscribers. Plovdiv Central Heating Utility's debts to Bulgargas for the first half of 2006 amount to BGN11MN, but the utility has signed an agreement with the gas company about their repayment. In the last three years its turnover has varied between BGN31MN and BGN35MN, and its financial profit has been about BGN1MN on the average.

The Austrian EVN which owns the electricity distribution companies in South Bulgaria is the most likely winner in the competition for privatisation of Plovdiv Central Heating Utility. That became clear early last week when the deadline for submission of final offers expired. Of the twelve companies which bought tender documents, only four were allowed to the final stage and two of them joined the bidding process. EVN proposed to pay EUR32.1MN and the French Dalkia International - EUR20MN and one euro. The other two allowed applicants - CEZ and the consortium between Gazprom and Overgaz, did not make offers.
At first sight, the documents seem regular. In a few days the Executive Board of the Privatisation Agency is going to announce the winner and if the act is not contested in court, we'll be able to begin negotiations about completion of the deal, the Privatisation Agency (PA) Executive Director Todor Nikolov said during the submission of offers. Still, he refused to comment on whether he was satisfied with the proposals. He added that if the deal was not protested before the Supreme Administrative Court, the privatisation agreement might be signed by year-end.
The procedure is not likely to be appealed, legal experts commented for the BANKER weekly. In their opinion, the only participant who may protest against the deal is Dalkia International, although the price they offered is over 50% lower than the Austrian one. The other two applicants who took part in the initial procedure and could appeal in court are the German E.ON and Gas de France since they were the only ones among the eliminated who met the competition requirements. However, the two companies did not applied for the qualification and therefore would hardly protest against the bidding. The privatisation procedure was open for strategic investors only - companies with long-term credit ratings of at least BB+ by Standard Poor's or Fitch, or Ba1 by Moody's as well as revenues of at least BGN100MN for each of the last three years. The applicants were also required to be producers, distributors and suppliers of electric or heat power who sold 600,000 megawatt hours of electricity or 1.8 million megawatt hours of heat for the last three years. That's how six of the applicants - Bulgaria's Enemona (Kozlodoui), Brickel owned by Hristo Kovachki, Bulgarian Energy Group, Happier Power Energy, and GP Energy, as well as the Turkish Zorlu Energy Electric Uretim, dropped out of the bidding.
After reviewing the offers, the PA will make a motivated proposal for a ranking, officials announced. They specified that the announcement of purchase prices pointed out by the investors did not provide an automated ranking. Beside the price which will be decisive, the ranking will also consider the investment program for the thermal power plant and the price of the heat power offered by the applicants.
Being the owner of the electricity distribution companies in South Bulgaria, EVN has strategic interest in acquiring producing power plants in the country. That's why their investment program for the Plovdiv utility certainly stipulates production of electricity. In turn, that will reduce the price of the heat power it produces.

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