Банкеръ Weekly



After more than seven years of delay, all agreements necessary for the building of Maritsa-Iztok 1 thermal power plant were signed on December 7. In the presence of Prime Minister Sergey Stanishev, the US Ambassador John Beyrle, the Minister of Economy and Energy Roumen Ovcharov, the AES CEO Paul Hanrahan, etc., the head of the 670-megawatt utility construction project Matthew Bartley signed three agreements.
The financial agreement is undoubtedly the most important one. The projecting and building of the plant will cost more than EUR1BN. ING Bank, BNP Paribas, the French Calyon and the EBRD provide 70% of the funds, or EUR790MN, while the remaining 30% will come from the AES.
The agreement will be valid for 12.5 years and the credit will be paid off by the revenues gained from the project. Bulgarian banks will participate, too, but their stake will depend on the four financing institutions, Mr. Bartley said.
The financial framework had to be specified in the middle of the current year, but regardless of the two letters of support delivered by the previous cabinet construction works had not started yet. The reason, according to sources familiar with the situation, are the prolonged negotiations for the ground on which the plant will be built. The ground is owned by Brikel AD, acquired by a company of Hristo Kovachki. The agreements with the briquette factory and the National Electricity Company for acquisition of the land and the property rights were only signed on November 23.
The other key agreement is for acquiring the electricity produced by the thermal power plant. It is valid for 15 years and the price at which the electricity company is going to buy electricity is a commercial secret. However, Minister Ovcharov did not forget to underline that it would be 14% lower than the one established seven years ago. The signing of this contract practically limited as much as possible the possibilities for establishment of a really liberalized electricity market in Bulgaria and for competition among the producers. Contracts of the kind were already signed by the other two big power plants in the Maritsa-Iztok complex, as well as by the Varna thermal power station which together produce almost half of the electricity in Bulgaria.
The third agreement was signed with Mini Maritsa-Iztok for acquisition of brown coals. However, it does not fix a price, the Executive Director of the state-owned company, Ivan Markov, told journalists. The mines' plans show that once Maritsa-Iztok 1 starts exploitation, it will swallow 7 million tons of coals a year.
We hope that we'll start constructing the power plant next spring. In the coming months we'll be working actively on the development of the project, Paul Hanrahan said. The construction of the first 335-megawatt block will need at least three years and a half, and the second - at least six more months. It means that the utility will start operations no sooner than the end of 2010, in case there is no other delay. Until then, the Bulgarian energy sector leaders will have to fill in the gap that will appear in the country's energy balance once blocks 3 and 4 of the Kozlodoui nuclear power plant stop working. The situation is further complicated by the delayed rehabilitation of the Maritsa-Iztok 2 and Maritsa-Iztok 3 thermal power plants.

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