Банкеръ Weekly

Briefs

INTERMEDIARIES SELL NEC'S ELECTRICITY ABROAD

More than a half of all deals for exporting electricity from the National Electricity Company (NEC) last year were made by intermediaries, Mityo Hristozov, Head of the company's Central Controlling Department, said early last week. The operator signed agreements with twelve intermediaries. Its managers claim that intermediary companies then take from NEC the risks of possible delay in the payments.
For the first five months of the current year the company has exported 11.7% more electricity compared to the same period of 2005. 3.578 billion kilowatthours of electricity have been sold on the foreign markets - half of the export went to Greece, 35% - to Serbia, and the rest - to Romania and Macedonia.
Probably in 2006 we are going to export as much as we did last year, when we registered over 7 billion kilowatthours. If next summer and autumn are humid, we may reach 7.5 billion kilowatthours, Mr. Hristozov predicted. Total electricity production in the country has grown by 5% from January to May compared to the previous year, reaching 19.8 billion kilowatthours. More than 16.2 billion kilowatthours have been sold on the domestic market.
NEC managers complained that because of the tariffs approved by the State Commission for Energy and Water Regulation their company was losing BGN3.5 per each megawatt of electricity. That is why in 2005 it accumulated liabilities worth BGN45MN which are expected to jump by further BGN15MN in 2006. In order to compensate part of the loss, the company began to attract middle-voltage consumers. At present, Biovet - Peshtera, Han Asparuh ceramics plant in Isperih, Mayer Melnhoff Carton - Nikopol, Ideal Standard - Sevlievo, and Energia - Targovishte buy electricity from NEC rather than from electricity distribution companies, the Head of NEC Economic and Financial Department, Lili Ivanova, informed.
The system operator sells electricity to the five companies at prices 33% lower than the tariffs of the distribution companies. Therefore, they pay BGN0.063 per kilowatthour instead of BGN0.08. However, this is not something that the owners of the distributors - Austria's EVN, Germany's E.ON and the Czech CEZ, would agree with. They claim that NEC's actions contradict the Energy Act and its own licence and threatened they would compensate their losses by increasing the price for households and small and mid-sized companies.
This does not contradict the law since according to our licence we are allowed to deliver electricity to all consumers attached to the transportation network, except for the privileged ones, as they negotiate directly with the power plants. Besides, the five companies have joined our substations through their own network and the electricity distribution companies have just installed electric metres in them. With no costs, they make a 33% profit per kilowatthour, Mrs. Ivanova explained. NEC has calculated that the newly-joined companies will have their electricity costs cut by BGN2.6MN for 2006.
NEC's actions have logical explanation. From the start of 2007, blocks III and IV of Kozlodoui nuclear power plant will be decommissioned as well and that will reduce the export possibilities almost to zero, so every single solvent customer will become quite important to the company. Otherwise, the company's financial results will have no chance to overcome the zero level.

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