A high voltage has occurred in Bulgaria’s power engineering field (especially in electricity production and distribution) over the past few days. It threatens to detonate the whole energy system. Bulgaria is among the European countries which top the ranking regarding per capita electricity production. This output exceeds local consumption and allows the export of huge quantities of electricity to the neighboring Balkan countries. The indebtedness of the National Electric Company (the state company which owns the biggest power plants in Bulgaria) has reached EUR 1.5 billion. The financial state of the company is so bad that in 2013 it paid only 53% of the electricity it obtained from local producers. According to official information of Bulgaria’s Ministry of Economy and Energy, the National Electric Company owes the two US power plants, AES and Contour Global, over EUR 145 million and over EUR 114 million respectively.
The problems relating to the power engineering sphere have been accumulating over the past 5-10 years. Let us remind that the public discontent with the high electricity bills was one of the main reasons for the resignation of the GERB cabinet in 2013. One of the first promises made by the leftist coalition which took over the country’s government last year was to set fair electricity prices. As a result of a highly populist policy, the prices of electricity in Bulgaria were nearly frozen and the electricity tariffs saw a slight increase on July 1, 2014, i.e. in the last days of the former cabinet. Experts calculate that as a result of this improvident policy, the National Electric Company has incurred losses to the tune of EUR 500 million for the past twelve months only.
The bubble of the unrealistic electricity prices, resulting in giant losses incurred by manufacturers of electricity in this country, had to explode sooner or later. It turns out that the catastrophe is to happen very soon, as politicians and energy experts started talking about possible disruptions of electricity supplies and undertook a series of urgent measures aimed at putting the sector back on its feet. In the middle of this week interim Premier Georgi Bliznashki launched an energy board. Experts believe that the energy board, which consists of manufacturers and traders of electricity, state institutions, experts and members of labor unions, employers’ organizations and consumers’ organizations, would play a vital role with their professional analyses and recommendations in processes related to significant issues of public interest in the power engineering field. Interim Deputy Premier Ekaterina Zaharieva headed the newly-established energy board, which proves that the caretaker cabinet counts a lot on the new structure.

Apparently, someofthefirsttasksoftheenergyboardare connected to thenewincreaseofelectricityprices. Moreover, a 16% increase of electricity price for Bulgarian companies and public organizations will come into effect on September 1, 2014. Meanwhile, personnel changes were made in the management of the Bulgarian Energy Holding, which is part of the National Electricity Company. Bulgaria’s interim Minister of Economy and Energy Vasil Shtonov demanded and later received the resignation of the Chairman of the State Water and Energy Regulatory Commission, the independent body which sets the rules at the Bulgarian energy market.

One thing is for sure: the structural, staff changes and organizational measures will not solve the problems in the energy sector, unless these changes are accompanied by an increase of the price of electricity adequate to the real cost of the energy, allowing electricity producers to make further investments in the sector. According to Interim Premier Georgi Bliznashki, the electricity price must see a gradual increase. The State Water and Energy Regulatory Commission announced several months ago that the electricity price would start increasing in October. It is still unclear whether it would happen, but if it does, what would the possible price increase be. Let us not forget that Bulgaria is to hold early Parliamentary elections on October 5, and that these elections are to bring a new government with new promises and ideas.

English version: Kostadin Atanasov